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August 18, 2023
Viveat Susan Pinto, Financial Express
August 18, 2023
Retail activity in the country is set to increase with some 20 foreign brands likely to enter India in the next 6-8 months, according to retail consultants and experts. This is double the number of about 10 foreign brands that would enter India annually in the pre-pandemic period.
An attractive retail market and growing affluence and consumer tastes are among the key reasons for the interest shown by foreign brands in India, said experts. Also, large groups such as Reliance and Aditya Birla are open to partnerships with foreign brands, with Reliance Brands, part of Reliance Retail, in particular, being the most aggressive of the lot.
“Global markets are witnessing slowdown and recessionary concerns, which is hurting retail sentiment. In contrast, retail sentiment in India is upbeat despite food inflationary pressures. Spending across non-essential categories will also grow as the festive season nears,” said Abhinav Joshi, head of research, India, Middle East & North Africa at consultancy CBRE.
The consultancy on Thursday released a report which said that retail leasing activity in India had grown 24% year-on-year in the first half of CY2023, led by foreign and domestic brands. The second half of the year was also expected to see a strong double-digit rate of growth in terms of leasing activity, with overall retail leasing likely to touch 5.5-6 million sq. ft. at the end of the CY2023, second only to the peak of 6.8 million sq. ft. seen in CY2019.
Of the names eyeing an India-entry in the next few quarters include labels such as Italian luxury fashion brand Roberto Cavalli, American sportswear and footwear brand Foot Locker, Armani Caffe, the luxury cafe brand of Armani, British luxury brand Dunhill, Dubai’s Brands for Less, Old Navy and Banana Republic from Gap, Chinese brand Shein, Maison De Couture from Valentino, Spanish luxury brand Balenciaga, EL&N, a UK-based boutique cafe, Galleries Lafayette from Paris, Kiabi, Mavi, Damat, Dufy, Tudba Deri, Avva, Boohooman and Miss Poem, all apparel brands from Turkey and Europe, say industry sources.
Barring Galleries Lafayette which has tied up with Aditya Birla Fashion and Retail for its India entry, most other names are either talking to Reliance Brands (part of Reliance Retail) or have tied up with the company, persons in the know said. For instance, Balenciaga, EL&N, Shein, Gap’s Old Navy and Banana Republic, Armani Caffe, Maison de Couture from Valentino have tied up with Reliance Brands for their India entry. Executives at Reliance Brands were not immediately available for comment.
Most of these brands are eyeing a presence in cities such as Mumbai, Delhi-NCR, Bengaluru and Hyderabad in the first phase of launch, before expanding their presence to other cities such as Pune, Ahmedabad, Chennai and Kolkata.
“The India retail opportunity is a compelling one, which most foreign retailers don’t want to miss,” says Devangshu Dutta, chief executive officer at Gurugram-based consultancy Third Eyesight.
“Some of the brands who’ve come earlier have also tasted success especially in the fast fashion category. This is an indication that brand awareness is growing and that people are ready to spend on global products as discretionary incomes grow,” he says.
On Wednesday, Japanese fast fashion retailer Uniqlo said that it was setting up two new stores in Mumbai in October, after launching 10 stores in the north over the last four years. The company’s chief executive officer Tomohiko Sei indicated that the retailer was open to new markets and store openings, but would focus on Mumbai for now.
CBRE says that Mumbai has seen retail leasing grow by 14.6% year-on-year in the first half of CY2023 on the back of a push by foreign brands to acquire space in the city. Delhi-NCR, meanwhile, reported a higher 65% year-on-year growth in retail leasing in the first half of the year, led by retail activity by both foreign and domestic brands.
(Published in Financial Express)
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July 19, 2023
Faizan Haidar, ET Bureau
19 July 2023
E-commerce companies’ share in warehousing space leasing has fallen to 3% amid declining demand from more than 20% during Covid-19. With the easing of the pandemic, demand faltered for e-commerce companies, even as bricks-and-mortar rivals rented 14% of space during the January-June period as they witnessed a demand resurgence.
In 2020, during the pandemic, e-commerce took more than a fifth of warehouse space while physical retailers had a 9% share, according to data by Savills India.
The overall leasing activity in India continued to grow, with a total space take-up of 22.4 million square feet in the first six months of 2023, up from 20.9 million sq ft a year ago.
“E-commerce companies had over-committed space during Covid, expecting the exponential growth they experienced at that time to continue. There are many facilities where they continue to pay rentals without utilising the full space,” said Gagan Randev, executive director, India Sotheby’s International Realty.
According to Savills data, after increasing demand for warehousing space over the past five years, tier-2 and tier-3 cities saw the share of e-commerce declining to 4% in the January-June period from 34% a year ago.
“In the past three years, year-on-year space absorption from e-commerce has undergone a significant change due to increased investments in their warehousing operations and footprint optimisation through automation, shelving and improved racking systems. These investments have enabled them to increase their existing storage space and enhance overall operational efficiency,” said Srinivas N, managing director, Industrial and Logistics, Savills India.
Experts said the companies are also looking to outsource the space they had taken during the pandemic.
“E-commerce overbuilt the capacity as Covid-led growth was harvested by them. Now that capacity is vacant. That’s why you see a lot of marketplaces trying to externalise their services. That is not coming out of a business model, that is coming out from vacant space,” said Ashvini Jakhar, founder of Prozo, which manages supply chains for companies.
In the first half of 2023, the third-party logistics sector continued to drive warehousing demand, accounting for 44% of the total absorption, up from 37% a year ago, followed by the manufacturing (22%), retail (13%) and fast-moving capital goods and consumer durables sector (6%).
“E-commerce, grew exponentially during Covid when physical retailers were constrained by prevailing conditions and immediately after that when chain stores were still recovering from the pandemic shock,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight. “However, the retail business in India is predominantly offline; as demand continues to grow overall, it is only natural for physical retailers’ own growth to be driven by the market’s momentum and that would be reflected in warehousing space taken up by them across the country.”
For most retailers, after Covid-19, the warehouse is the epicentre for omnichannel distribution network for offline as well as online clientele.
(Published in Economic Times)
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April 21, 2023
Viveat Susan Pinto, Financial Express
April 21, 2023
Retailers of Apple products in Mumbai and Delhi, which account for around 20-21% of the brand’s annual sales in the country, fear the launch of stores by the US giant within these cities may dent their business.
In particular, retailers in the vicinity of these outlets, at Bandra-Kurla Complex (BKC) in Mumbai and Saket in Delhi, say consumers will prefer to go to these company-owned stores rather than make it to their outlets to purchase Apple products.
“That is a visible danger for those Apple retailers who are located near these outlets,” a senior executive at Unicorn Infosolutions, an Apple premium reseller in Delhi and Mumbai, said. Unicorn has 37 outlets in the west and north of India and is looking to its increase its footprint to 75 stores in the next three years.
“You have to keep in mind that the base of consumers for Apple is growing, both in Mumbai and Delhi as well as other cities. It will not be feasible for all the consumers to make it to these outlets. Yes, some high-end consumers may choose to shop at these Apple stores in the two cities, but for those staying away from these stores, it will be difficult to make it to these outlets,” the Unicorn executive said, declining to be quoted.
Nilesh Gupta, managing director of Vijay Sales, an electronics retailer, which has stores in the west and north of India, had reiterated a similar point on Tuesday (April 18), the day the Apple BKC store was launched in Mumbai. He said that he saw the store launches in Mumbai and Delhi as an opportunity for brand-building and further growth in sales.
“Apple is launching just two stores in India, one in Mumbai and the other in Delhi, for now. Even if they launch more outlets, not everyone will be able to make it to these stores, given the size of India and the aspirations of people wanting to own an Apple. The word-of-mouth and excitement going around following the launch will positively impact all of us who stock and sell Apple products in the country. I see more consumers wanting to buy Apple products in the future,” Gupta said.
While Apple has been in India for more than 25 years, it has had no direct retail presence in the country until now. An Apple online store in India was launched around three years ago. In other words, say experts, the Cupertino-based tech giant has depended largely on a network of online and offline retailers, including premium resellers, multi-brand operators and e-commerce channels, for sales in India.
“And Apple will want to ensure that its retail partners are not impacted because of its direct retail foray into India,” says Devangshu Dutta, founder and chief executive officer, Third Eyesight, a Gurugram-based retail consultancy.
“The Apple premium resellers, for instance, may choose to upgrade their retail experience at their outlets to ensure that there is no loss of business, especially in Mumbai and Delhi,” Dutta said.
Apart from Unicorn, some of the other Apple premium resellers in India include Maple in Mumbai and Ample Technologies, which runs the Imagine brand of stores in cities such as Bengaluru and Chennai.
Both the Apple stores in Mumbai and Delhi are high on experience, visitors to these outlets have said, coming at a time when the brand, amongst the most valuable in the world, has clocked a record revenue in India.
A Bloomberg report this week said that Apple had reported a turnover of $6 billion in India in FY23, up from $4.1 billion in FY22.
The Apple craze has drawn huge crowds both to the Mumbai and Delhi stores this week. The retail push will come as the company looks to expand manufacturing in India, experts said.
While Apple has been manufacturing older iPhone models in India since 2017, it began assembling the most recent smartphone models in 2022, with the iPhone 14.
According to the International Data Corporation (IDC), Apple’s iPhone shipments in India stood at 6.7 million units in 2022 against 4.8 million in 2021 and 2.7 million in 2020.
Apple also captured 25% of the ‘Made in India’ smartphone shipments in terms of value in 2022, compared to 12% in 2021, according to Counterpoint Research.
Among cities, Mumbai accounted for 10% of iPhone sales in India, trailing only Delhi, which accounted for 11% of sales, Counterpoint Research said.
(Published in Financial Express)
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March 15, 2023
Faizan Haider, ET Bureau, 15 March 2023
Value apparel brands are set to grow in India.
The success of Tata Group’s Zudio that sells clothes below Rs 1,500 has prompted Reliance, Shoppers Stop and several global brands to enter the mass-priced retailing segment.
While Reliance Retail is planning to launch a value apparel format, likely to be named ‘Youth’ to compete directly with Tata’s Zudio and Landmark group-owned Max, Shoppers Stop is coming up with a mass-priced brand, internally called InTune, people in the know said.
Aditya Birla Fashion & Retail has been eyeing shoppers in tier-2 and -3 cities with Style Up, a similar format, while affordable French brand Kiabi is in talks with retail space providers and potential partners to enter the India market.
“Although there is a significant concentration of demand in the metro cities and tier-1 cities, these are also hypercompetitive markets. With economic growth spreading into the smaller cities and rising aspirations, especially among young consumers, there is an opportunity for brands to expand into these markets,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight.
“However, keeping price-sensitive segments in mind, companies are creating new labels and brands, rather than pulling down their existing brands’ selling price,” Dutta said.
Trent, the Tata Group company that houses retail brands such as Westside, Zudio and Landmark, had earlier said that while Westside accounted for 70% of its standalone business, Zudio had the potential to outpace the department chain due to the size of the opportunity in the value segment.
“While the value format can offer growth in smaller cities, in metro cities the retailers are trying to target youth through this format. The youth is also aware of the sustainability part and most of these brands are focusing on it,” said Shriram PM Monga, who cofounded retail consultancy firm SRED.
Both Reliance and Shoppers Stop are looking for 6,000-9,000 sq ft space at malls and high street for their new brands, said a person familiar with the development.
Experts said India’s consumption structure was skewed in the past over a narrow base of rich consumers accounting for a large chunk of the market. However, as the economy is broadening across many more cities and the impact is reaching further down the income ladder, the opportunity for value formats and value brands is expanding.
For Lifestyle International, its value brands Max and Easy Buy have already outpaced the department stores by sales, indicating that consumers are increasingly seeking either lower-priced merchandise or opting for global brands such as Zara and H&M for fashion apparel instead of department stores.
(Published in The Economic Times)
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February 23, 2023
India’s economy is in focus globally, and is also at an inflection point.
Join Devangshu Dutta at the Asia-Pacific conference of UFI, The Global Association of the Exhibition Industry. Registration Link: https://lnkd.in/dq89_rY3
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