Growth gets thinner for Zara as competition grows in size

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May 20, 2024

Sagar Malviya, Economic Times

Mumbai, 20 May 2024

Spain’s Inditex, the owner of fashion brand Zara, saw its slowest ever sales growth in India, excluding the pandemic year, in FY24 as the world’s largest fashion group faced rising competition from global rivals in the clothing market that is increasingly getting cluttered.

Inditex Trent, its joint venture with Tata that runs 23 of Zara stores in India, saw revenue rise 8% to Rs 2,775 crore last fiscal, significantly down from 40% growth a year ago, according to Trent’s annual report. Net profit was down too at Rs 244 crore, an 8% drop.

Zara has been a runaway success since its arrival in the country more than a decade ago but after initially doubling sales every two years, the brand’s rate of expansion had come down in the past few years. “The market is very competitive, and the challenges are real. Nevertheless, the opportunity pool and the size of the market means that there is space for multiple successful players. Trent remains well placed to navigate this next phase of growth by leveraging our platform and growth engines,” P Venkatesalu, chief executive officer at Trent, said in the report.

Trent that runs Westside has shifted focus on its lower priced fast fashion brand Zudio, which opened about four new stores every week on average last fiscal to take the total store count at 545 doors. Trent also has a separate association with the Inditex group to operate Massimo Dutti stores in India. The entity saw revenues rise 14% to Rs. 102 crore.

Experts said consumer demand has been affected in the past couple of years with brands having to work extra hard to get same-store growth and much of top-line growth has come for brands from store additions.

“Most international and premium Indian brands are competing for a relatively narrow slice of the population pie in the larger urban centres. While the Indian market is a bright spot amid the gloom in the world’s major economies, global pressures are likely to play a part in the confidence among brands to invest in expansion,” Devangshu Dutta, founder of retail consulting firm Third Eyesight, said, adding there is not necessarily “fatigue” for the brand.

“But if the contest for the consumer’s attention is more intense and the consumer’s choices are more fragmented across a wider choice of brands, that will definitely have an impact on any individual brand’s performance.”

Being the world’s second most-populous country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing western-style clothing. Most of Zara’s back-end and merchandise sourcing are handled by Inditex, while the Tata expertise is mainly for identifying real estate and locations.

(Published in Economic Times)

Seamless Customer Experience in an Omnichannel Retail World

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May 8, 2024

At the recent Phygital Retail Convention in Mumbai, Devangshu Dutta anchored an engaging “Fireside Chat” with Bhavana Jaiswal of IKEA India and Kapil Makhija of Unicommerce , on retailers engaging with their customers across channels and formats, and the opportunities as well as challenges in managing experiences seamlessly across online and offline interfaces.

Watch the video at this link:

Sequoia struggles to sell Prataap Snacks

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February 29, 2024

29 February 2024, Mumbai

Prince M. Thomas, TheMorningContext

Prataap Snacks should have been an easy sell for Peak XV Partners. The venture capital firm, which till recently was known as Sequoia Capital India, is the largest shareholder in the snack maker with a 47.56% stake. It first invested in Indore-based Prataap Snacks in 2011 and has since seen the company become the sixth largest player in the industry. An exit now would give Peak XV returns that would match some of its best exits, like those from Zomato and Go Fashion.

The reality is, finding a buyer for Prataap Snacks isn’t as easy as selling a packet of “chatakedaar” rings bearing its Yellow Diamond brand. In fact, those packets of rings may be one of the reasons why the company seems to have lost some of its spice with suitors. We will come to that in a bit, but first it’s remarkable how many doors Peak XV has knocked on without any luck…

The company’s choice of products, most of them falling under the category of “western snacks”, was prudent. “When it comes to snacks, the Indian market is very diversified. Each region has its own flavour and there are local nuances,” says Devangshu Dutta, founder of consulting firm Third Eyesight. That means a regional snack, like the gathiya that is popular in Gujarat, will have fewer takers in eastern and southern states. Prataap Snacks’s products had no such problem as chips and rings were not region-specific…

Read more at: https://themorningcontext.com/business/sequoia-struggles-to-sell-prataap-snacks

Fashion 2024 & Beyond: Adapting to Changing Innovation Dynamics (VIDEO)

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February 21, 2024

The ability of fashion businesses to endure and thrive in the face of stiff competition and changing market dynamics is all about adapting to innovation, customer-centricity, and strategic planning. The correlation between high performing fashion business and product innovation is undeniable.

This panel discussion brings Design and Business Heads together to brainstorm on how fashion companies can devise strategies to drive innovation to remain competitive, meet evolving consumer expectations, and stay ahead of the race.

Moderator: Devangshu Dutta, Founder & Chief Executive, Third Eyesight

Panelists:

  • Anshu Grover Bhogra, CBO, Forever New
  • Diksha Bhatia, Founder, Gioia Co
  • Mansi Lohia, CEO, Black Watermelon
  • Rohit Aneja, Director- Grapevine Designs, CEO be-blu! Lake Como
  • Sean Ashby, Founder & CEO, Aussiebum
  • Swikruti Pradhan, Founder, Rustic Hue
  • Yogesh Kakar, Chief Product Officer – Tommy Hilfiger & Calvin Klein, PVH Arvind Fashion

Package Deal

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February 21, 2024

Sharleen D’Souza, Business Standard

Mumbai, 20 February 2024

Over the past year, Amul has undergone a transformative journey, evolving from a dairy-centric entity to a comprehensive foods company.

Since 2022, PepsiCo India, too, has embarked on extensive launches in the food category.

Not to be left behind, ITC, which has been introducing an average of 100 fastmoving consumer goods (FMCG) products across categories every year, has also launched a number of packaged food items.

The shelves in stores are packed. The options on e-commerce platforms are dizzyingly aplenty. The consumer is spoilt for choice. Which flavour of oats to go for? What packet of chips to pick? Should one reach out for those mouthwatering frozen snacks or think healthy and opt for atta (wheat flour) cookies?

Companies are pulling out all possible goodies in the form of packed food.

It is a strategic shift initiated during the pandemic and which has proven to be a lasting trend. During the pandemic, when other businesses were curtailing expenses, food companies started launching new products as consumers turned to packaged food.

Amul identified a growing preference for purity during the pandemic, and realised that this preference was here to stay. The company aggressively expanded its product range, venturing beyond dairy into items such as organic dal, atta, and basmati rice.

“We noticed that consumers were moving from unbranded to branded products, and were increasingly seeking out those that would boost their immunity,” says Jayen Mehta, managing director, Gujarat
Cooperative Milk Marketing Federation. Even later, as the world moved out of the pandemic, the preference for packaged foods continued.

Convenience foods, which had gained prominence during the pandemic, sustained their popularity. The widespread adoption of modern retail formats, including brick-and-mortar, e-commerce and quick commerce, proved to be further growth enablers for packaged foods. These formats facilitate the display of entire product ranges to a larger consumer base, says brand expert Devangshu Dutta, founder at Third Eyesight, and that helps.

Growing platter

Today, while Amul’s flagship product, packaged milk, is recording double-digit growth, Mehta says the company is also focusing on premiumisation by introducing artisanal cheese and products such as
Amul High Protein Buttermilk, high protein lassi and shakes, and whey protein.

ITC’s diverse launches, meanwhile, include lump-free Aashirvaad Besan, frozen breads, Dark Fantasy centre-fill cookies, and a variety of Master Chef frozen snacks such as paneer pakoda and onion rings, B
Natural fruit juices, Aashirvaad Svasti ghee, and so on.

Last year, as the focus turned to millets, and 2023 was declared International Year of Millets, the Kolkata-headquartered conglomerate saw a healthy business opportunity. It launched ITC Mission Millet with
an array of millet-based products: Sunfeast millet cookies, Aashirvaad millet mixes, YiPPee! millet-based noodles, Candyman Fantastik chocsticks with millets, and more.

“The company will continue with its focus on consumer-centric innovation and product launches across its portfolio,” says Hemant Malik, executive director, ITC. A finger on the consumer’s pulse, product research and development through ITC’s Life Sciences and Technology Centre, and an extensive omnichannel distribution infrastructure are helping the game.

PepsiCo India, too, is in the race to capture a growing share of the packaged food market. How serious the company is about this can be gauged from the fact that since 2022, its launches in the packaged food category have been the highest since it entered the food space in 1995.

It is not even two months into 2024 and PepsiCo has already launched three flavours in oats: masala magic, herby cheese, and mixed berries.

Last year, it had four launches and introduced seven new flavours in Doritos and Kurkure. And in 2022, it launched five new products and eight new flavours in Doritos, Quaker Oats and Lay’s.

In Lay’s, it went premium and launched Lay’s Gourmet.

Sravani Babu, associate director and category lead at Quaker Oats, says while the category is nascent compared to other FMCG segments, it is growing in double digits. So, the three new flavours were a
considered call.

While “basic oats continue to be the leading segment in the category,” she says, with these new flavours, the company is looking at oats as not just something one eats for breakfast. With PepsiCo keen on broadening the oats portfolio, the bowl is expected to see even more variety in the time to come.

Food in a jiffy

Quick commerce, which promises deliveries within 10 minutes, has also accelerated in-home consumption trends, said Saumya Rathor, category lead of potato chips at PepsiCo India, in an interview.

Consumer habits, she said, take decades to evolve, but the pandemic hastened that shift. So, the convenience-driven traction for packaged foods has persisted. E-commerce and quick commerce have only expanded packaged snack penetration across the country.

In response to the growing demand, PepsiCo India has announced its first food manufacturing plant in Nalbari, Assam, with an investment of Rs. 778 crore ($95 million). Scheduled to be operational in 2025,
this expansive facility spans 44.2 acres and underscores the company’s desire to make the most of the rising consumption trends in the foods sector.

Other food companies, including ITC and Amul, have also embraced an assertive stance, launching products strategically.

The trajectory indicates a promising future for India’s packaged food sector. The shelves are set to overflow.

Size of the packaged foods market: In 2022, India’s packaged food market size was $2.7 billion and it is projected to reach $3.4 billion by 2027

(According to Statista)

(Published in Business Standard)