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Brands entering India – A study!

Since the beginning of this financial year, 32 foreign fashion retailers have entered the Indian market via the online route while 22 have chosen to set up stores in the country. Most of the brands which opted to set up stores did so in Mumbai and Delhi. Of the online retail entrants, as many as 44%, are from the UK. The supply of retail space has grown 103% compared to the previous fiscal to 3.6 million sq ft. Delhi remains the prominent retail destination, with 85% of entrants setting up shops in the national capital, according to the report on the organised retail market in India in 2015.

The preferences of Indian consumers have always been different from their western counterparts considering the culture and religions. Price has been a sensitive factor; every brand had to keep in mind while eyeing a pie of Indian market. It’s an open secret that top-end luxury brands, such as Cavalli, Armani, and Versace, struggled in India. Versace and Jimmy Choo, in fact, existed before re-entering, and Louis Vuitton had to close its Chennai outlet, while the affordable luxury brands seemed to be hitting a chord. Also, poor infrastructure facilities and lack of high-end streets/malls made it tougher for these luxury brands in standing coupled with high import duties. Indians who desired Luxury Apparels preferred to purchase at global stores on their trips abroad. Despite so many challenges, the luxury sector is growing steadily at a pace of the Average 20% PA, several years in a row.

 

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Increasing retail presence of luxury players across the country and higher numbers of luxury brands entering the country resulted in the strong performance of luxury goods over the review period. The Indian luxury market growth is estimated at 30 per cent and projected to reach $14 billion by 2016. Also, driven by increasing income and aspirations, Indian consumer spending is expected to grow four times to $4.2 trillion by 2017.As metro cities reach a saturation level with an increasing number of luxury brands, mastering low-cost models would be a key to success beyond the metros. Hence, the Luxury brands are expected to have a strong growth in India in the near future. The government has always been consistent in supporting market development be it through trade liberalization, tax ratification or open approach towards foreign investments.

With the rollout of the recent Union Budget, India has now allowed 100 percent FDI (foreign direct investment) in single brand retailing to help fuel the growth opportunities for both foreign retailers as well as the domestic market. From past couple of years, looking at country’s lucrative retail horizon, many global retail brands and retailers are planning to access Indian market considering its strength as a retail destination across the globe. While global brands such as H&M, GAP, Ikea, Starbucks and many other have already cemented their grounds in the country, still there are many on the waiting list.

“More than 50 mid-rung global retailers are planning to enter India within the next six months, according to data compiled by Franchise India that has tied up with them for their launches, with their eye mostly on smaller, untapped markets within the country. Brands such as Korres, Migato, Evisu, Wallstreet English, Pasta Mania, Lush Addiction, Melting Pot, Yogurt Lab and Monnalisa, many from the US and Singapore, will invest about $300-500 million — all told to open roughly 3,000 stores, triggered by the country’s expanding economy, booming consumption, urbanising population and growing middle class. Retail.ecommerce.indiatimes.com”

Iconic smartphone maker Apple has been trying to operate company-owned stores in India since a couple of months now. The American conglomerate, after failing to get approval for single-brand retailing has once again filed a proposal for the same. Apple’s first plea was rejected due to some loop holes in its application and DIPP had sought more information from the company. Apple has its company-owned stores in countries like Germany, US, UK, France, China but does not own a wholly-owned store in India as of now. It sells products through distributors and E-commerce industry websites. With the recent liberalization of retail policies, it is speculated that many of such global brands will sooner or later set up or expand their operations in the country.

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