“Global Luxury Brands” : Why India matters ? | by: Sapna Agarwal | Livemint

A look at the issues related to the potential of the ” Indian Luxury Market “, estimated to be worth $14 billion a year..!! 

A large and growing middle class in India is not only buying luxury goods and services but, inevitably in an Emerging Market the size of India, is also redefining the luxury market..

There’s an image of India—one that has persisted despite being a cliche—that is contoured by contrasts: Maharajas on the one hand, in full regalia and motorcades of Rolls Royce limousines, and poverty and hunger on the other. As India of the 21st century aspires to rank among global manufacturers and service providers, the luxury that once defined the Maharajas is a matter of widening aspiration, too..

The national airline—whose mascot was the Maharaja—no longer carries just the privileged few to the Swiss Alps and other luxury holiday destinations. A large and growing middle class in India is not only buying luxury goods and services but, inevitably in an emerging market the size of India, is also redefining the luxury market. But while India tops the list of tomorrow’s markets, it is yet to make it to the top in the priority markets list of luxury marketers..

What will it take for luxury marketers to tap into India? And what will it take for India to realize its luxury potential to the maximum? Experts and marketers gathered at a two-day Mint Luxury Conference in Mumbai on 31 October and 1 November to discuss some of these issues and challenges. Firstly, the definition of the Indian luxury consumer needs to change—start with banishing that cliched image of the Maharaja. “Luxury cannot be limited to just the very top or 0.01% of the population,” says Abheek Singhi, senior partner and director, Asia-Pacific leader-consumer and retail practice at consulting firm The Boston Consulting Group.

He estimates the Indian luxury market to be worth $14 billion. But for a country with a population of 1.2 billion, there are just 117,000 people who are classed as ultra-rich—people who have family wealth of over Rs.25 crore or earn Rs.3-4 crore a year, says a July report by Kotak Wealth Management. This segment of consumers prefers to do their luxury shopping abroad. In the local context, luxury denotes brands that globally are a notch lower than the finest, appealing to a wider audience of the top 1%, 5% or even 15% who have the aspirations and the money to buy them, said Singhi..

To grow the luxury market, “marketers selling in India need to be innovative and reach out to new consumers”, says Sanjay Kapoor, managing director of Genesis Colors Pvt. Ltd, parent of Genesis Luxury Fashion Pvt. Ltd whose portfolio includes brands such as Bottega Veneta, Burberry and Canali. According to Kapoor, luxury marketers need to continually “upgrade” consumers used to buying premium to luxury goods and services. “It’s a continuous process of educating people about brands to grow the existing business,” says Kapoor. Adding new brands and opening new stores is the business part of the same process..

There are FIVE Luxury Consumer Segments emerging in India, says Singhi : Classpirationals, who want to blend in with the classes; Fashionistas, or Trendsetters; Experiencers who love travelling, wine tasting, etc.; Absolute Luxurers for whom luxury is about exclusivity and customization; and Megacitiers—part of the global elite..

As such, the Indian luxury consumer is spread across the metros, tier-I and tier-II cities. “Close to 40% of the Indian luxury consumers are living outside of metros and shop on their travel overseas or in the metros,” says Singhi..

Firms seeking to expand in India speak of infrastructure challenges. For instance, India got it’s first luxury mall—DLF Emporio—in south Delhi in 2007. Now, there are just two more luxury malls in the country. “The biggest impediment to the development of the luxury market is the lack of infrastructure and an environment,” says Rahul Prasad, managing director (Asia-Pacific and Middle East), Pike Preston Partners Ltd, a boutique advisory firm on mergers and acquisitions in the fashion and luxury segments..

Meanwhile, with the new National Democratic Alliance (NDA) government in India, businesses are hopeful regulatory hurdles will be resolved. “The new government’s approach has energized a number of companies, including multi-brand retailers and international retailers..,” says Pierre Mallevays, founder and managing partner of Savigny Partners LLP, a corporate finance advisory firm focusing on the retail and luxury goods industry..

At the Mint Luxury summit, Nirmala Sitharaman, commerce and industry minister, agreed to look into the requirement of 30% sourcing from domestic companies for single-brand foreign retailers who are allowed to invest 100%..

The challenges remain daunting. According to Armando Branchini, vice-chairman of the Altagamma foundation, a conglomerate of several high-end Italian companies, there are 17 Italian luxury brands in India at the moment, a number that has remained unchanged since 2005..

British luxury brands are focusing their efforts in other markets such as China, says Charlotte Keesing, director at Walpole British Luxury, a consortium of British luxury retailers like Jimmy Choo, Harrods and Burberry. Eight years ago, India and China both were on the long-term radar of luxury product marketers..

Today, China has become one of the biggest growth drivers of such products, and India is yet to take off…“ There are only 18 of 90 British luxury retailers present in India today and less than a dozen are looking at entering the market in the next two years,” said Keesing…

“South India’s Real-Estate Hotspots” for Investments | by: Juggy Marwaha | Realty Plus

Until only recently, the South Indian Real-Estate Market was known as highly price-sensitive, with buyers primarily focused on the Affordability quotient…!!

Developers had to adopt a strategy to entice potential end-users and investors by offering their products in the right price band. However, with more and more foreign companies establishing their back offices in prime locations of South Indian cities and offering power jobs to the local populations, the South Indian economy has witnessed rapid growth over the last few years. This has visibly reflected on their real estate markets, as well..

Of late, the most important South Indian real estate markets – Bangalore, Chennai, Hyderabad and Kochi, have been faring very well. This dynamic was evident even when the nation was going through a phase of low sentiments. While the burgeoning IT sector in these cities is the main reason behind the real estate boom in these cities, some of them also have a rapidly strengthening industrial base which is further augmenting real estate demand..

Bangalore :

The commercial office leasing trends in Bangalore clearly reflect that the city is topping all others in terms of space and job creation. IT, ITeS and retail are driving employment creation in the city. Bangalore is expanding in all directions, and with most phases of the Metro on track in terms of deployment, Bangalore has emerged as one of the best investment destinations for affordable, affordable luxury and luxury segment housing.

North Bangalore has seen residential prices doubling in the last 4-6 years, and many other pockets have witnessed good appreciation as well. Brigade Gateway, one of the best integrated townships in Bangalore featuring the World Trade Centre, a mall and a 5 Star hotel, was launched at a price of Rs.5,000/sq. ft. about 4-5 years back and is now transacting at above Rs. 10,000/ sq.ft.

There are numerous such examples wherein reputed developers and landmark developments have been instrumental in prices doubling and going even higher in the last 4-6 years. The finest developments in Whitefield by Sobha, Brigade, Prestige, Total Environment and Chaitanaya have practically doubled in terms of capital values in the last 5 years.

Chennai:

Residential property prices in Chennai have escalated the fastest among the cities in India, witnessing an appreciation of almost three times of what they were in 2007. However, Chennai still faces supply constraints in its prime locations in terms of new and organised development..

Traditionally, buyers in Chennai were hesitant to move to the suburbs, as the options available in the key pockets were highly priced. Very similar to the cities like South Mumbai, Delhi and Kolkata, buyers in Chennai are very particular about address and pin code value. As the city is in expansion mode with the rapid development in Chennai’s social and physical infrastructure, the suburbs and extended suburbs such as Velacherry, Peringudi and OMR belt are witnessing an upsurge in its property prices with corresponding demand.

Areas like Ayanavaram, Virugambakkam, Nungambakkam and Ashok Nagar have recorded the maximum appreciation. With limited supply and few organized developers in Annanagar and Kilpauk, end-users and investors are finding prices attractive in these neighbouring areas. With noted developers such as Chaitanaya, Vijayshanti and Arihant-Unitech active in these areas, there is a steady increase in demand.

The Central business district of Chennai, Nungambakkam, has managed to maintain the highest appreciation values with only few organized developers active in the area. However, with the Metro rail route passing through Ashok Nagar and with host of reputed and local developers’ active along the belt, a considerable amount of demand has shifted to this micro-market.

This is because of the presence of large commercial and entertainment-shopping establishments such as Phoenix and Forum and the availability of adequate social and physical infrastructure such as quality educational institutions and hospitals have proven beneficial in garnering demand from end-users and investors.

The three key growth drivers of IT / ITES, automobile manufacturing and education sector are instrumental in driving the job creation in Chennai. The price appreciation in specific pockets forecasts to be extremely good over the next 12-18 months. Some of the projects which are garnering attention from end-users and investors are Falling Waters in Peringudi, Oceanique on ECR Road, Embassy Residency and Pristine Acres in OMR.

Hyderabad:

Taking in consideration the current prevailing prices, developers have very little room for profit. Properties here are value buys in all respects, and one cannot go wrong with buying into quality projects at the current price levels with an investment horizon of 3-5 year. The Telangana agitation was the primary reason for the stagnation of prices in Hyderabad.

While Hyderabad’s average prices may reflect stagnation, there are multiple exemptions to this rule. A few such instances are Jayabheri’s Orange County, which has seen 33% absolute appreciation within a horizon span of 3-4 years and Jayabheri’s Silicon County, which has almost doubled in the last four years. Aparna’s Sarovar Grande has seen about 43% absolute appreciations in the last 12-15 months.

Good projects by reputed developers have shown very robust capital appreciation in the city. Though Bangalore and Chennai has clocked better appreciation values, Hyderabad by no means has lacked appreciation growth – it has merely been selective.

The socio-political and economic scenario is now far more favourable for the real estate sector. Hyderabad’s real estate market is likely to grow at a relatively faster pace to give renewed competition to cities like Bangalore, Chennai and Kochi. In the mid-to-long term, investor confidence in Hyderabad real estate will emerge in force once more. Companies like Facebook, Google and Apple have long-standing plans to expand their bases in Hyderabad – a factor which will work in favour of faster appreciation.

One of the hottest emerging locations is Vijaywada, where land prices have increased by almost 300% because of speculation. This renders Vijaywada unviable for residential projects over the short term, but a price correction from the speculative levels in anticipated over the next one-and-a-half years. After that, many more corporates will move into Vijaywada, thereby boosting residential demand as well.

Kochi:

Kochi is an emerging metropolis where modern urban lifestyles are merging with the city’s traditional framework. During its initial realty boom, Kochi grew exponentially, with more people migrating to the city and consuming even the outlying catchments of Kakkanad, Palarivattom, Vytilla, Edappally and Kadavanthra.

Development of IT/ITES projects such as the Kochi Smart City and initiatives to channelize traffic and improve connectivity – such as the Mobility Hub at Vytilla – have fuelled the current real estate boom, with more and more developers cashing in.

The days when builders in Kochi focused only on affluent buyers are over. The Kochi residential real estate market is now replete with affordable housing projects, which account for about 60% of the total housing development in the city. The soaring land prices have made it difficult to own or build independent houses, which were once the most popular configuration in Kochi. There is an increased demand from the emerging mid-income segment that wants homes packed with amenities at affordable prices.

The demand for budget housing is so strong that supply has penetrated even the poshest areas. The prime localities that offer luxury multi-storey apartments, such as Marine Drive, are seeing the arrival of affordable and mid-income housing projects in the vicinity to the more expensive waterfront apartments and villas.

While the global recession in 2009-’10 impacted all markets across the country, there was no decrease in Kochi residential real estate between 2012-13. Kochi is an investor market with many investments coming in from the Gulf via NRIs. In most cases, flats in new projects are sold out to the tune of 80% very quickly, but less than 20% would be actually occupied.

Luxury apartments on Marine Drive were quoted at Rs. 3800-4000/sq.ft in 2008-’09. Now, the rates for premium apartments in this area have almost doubled. Mid-range apartments by local developers are usually sold out by upto 90% of the inventory over a period of 1.5-2 years. The apartments in non-prime areas need to sell at price tags of upto Rs. 70 lakh….!!

The Glittering “Power of Cities” for “Luxury Growth” | McKinsey

The global economy is experiencing an unprecedented shift toward emerging-market cities. Here’s a road map of where luxury-goods companies should compete in the next decade…!!

An Economic Re-Balancing of Great Scale & Speed is occurring from the West to the East and South…In fact, we are observing one of the most significant economic transformations the world has seen: 21st-century China is urbanizing on a scale 100 times that seen in 19th-century Britain and at TEN Times the speed…This means that the shift currently making Asia—once again—the world’s economic center of gravity is 1,000 times larger than was witnessed during the Industrial Revolution..

One of the most dramatic aspects of this emerging-market economic revolution is the growing power of cities and the extreme growth concentration in a limited number of megacities. The world’s top 600 cities (measured by absolute GDP) are expected to drive nearly two-thirds of global economic growth by 2025..

Massive urbanization will continue across emerging markets, which will envelope three-quarters of these large cities. It is projected that by 2025, there will be 60 megacities—more than double the current number of urban behemoths—where GDP will exceed $250 billion, accounting for a full one-quarter of global GDP…

Out of the 25 largest growth-contributing cities, 21 are located in emerging markets, with a significant number of them in China. This represents a great leap from today’s status quo, in which only 4 of the 25 wealthiest cities are found in the developing world. Yet economic growth does not automatically mean consumption development—or luxury-market growth…Market growth in these cities is indeed conditioned by specific factors that differ from city to city. Variables such as birth rate, wealth distribution, and share of working women correspondingly affect growth in categories such as baby food, beauty products, luxury goods, and women’s fashion. To prioritize their efforts, companies will need to identify the biggest and fastest-growing cities with regard to their particular products and services..

Where Luxury Growth will come from? :

Using the McKinsey Global Institute’s Cityscope—which draws upon broad sets of economic and socio-demographic data for more than 2,600 cities around the world and combines these with deep market understanding to forecast growth at the level of individual cities—we have developed a unique road map for how luxury companies should understand and approach global-growth opportunities. Our LuxuryScope “city guide” of luxury markets organizes granular data and statistical forecasting across luxury categories. For example, several critical, market-level insights emerged from our analysis:

  • Growth is increasingly shifting toward emerging markets across all Luxury Categories

  • Luxury growth is highly concentrated in cities. The world’s top 600 cities will account for 85 percent of growth in the luxury-apparel market in 2025 versus 66 percent for luxury beauty products and only around 40 percent for consumer packaged goods. In fact, the more upscale and less “basic” products that consumers desire, the more growth will be concentrated in cities.
  • Mature cities remain critical given their absolute size
  • Growth is granular and varies by category, price point, and style. Driven by cultural fit with a brand’s value proposition and underlying growth factors by category and price point, the attractiveness of particular cities can differ significantly among luxury players. For instance, luxury women’s apparel is dominated by the traditional fashion capitals, such as Milan, New York, and Paris; spirits are strong in the Americas, while skin-care growth is concentrated in Asia. Mexico City, for instance, ranks 18th in fashion, 8th in spirits, and does not even appear in the top 20 for beauty…But within each of these categories, the attractiveness of any single brand will also vary depending upon its fit with local taste..
  • Emerging countries will drive growth, with China taking the lead.

This extreme growth concentration is great news for #LuxuryBrands and #Retailers…It will allow companies to more easily and completely focus their efforts on higher-growth areas. Analyses conducted on growth concentration by city reveal that extensive growth opportunities still exist in Europe and the United States, even in cities as large as London, Los Angeles, and Paris…The city approach to growth can also serve as a compass for companies seeking to navigate the vast sea of emerging markets, helping players to prioritize cities and focus their resources on targeted market-entry plans, whether in Belo Horizonte, Brazil, or Wuhan, China..

What Companies must do? :

Taking the city-by-city approach can help luxury companies revamp their growth strategies and gain new insights that can be used to adjust their business-development models, resource allocations, and organizational structures. How can these new business insights into potential on the city level be used to accelerate companies’ growth ?

The Right Plan:

It is well understood that having the right strategic plan is the essential starting point for any growth journey. Building this plan requires clear answers about where to go and when. Luxury-goods companies must identify growth opportunities at the city level, generating insights on where to concentrate resources to achieve the greatest impact. In addition, this approach also encourages the development of forward-looking market intelligence, a key enabler for ensuring that strategic decisions will allow companies to stay one step ahead of the competition. The city “attack plan” might look quite different from the traditional market-expansion road map. For instance, rather than discussing Asia or Europe as alternative locations—or even Spain versus France—decision makers may ask, “In what ten key cities should we establish a stronger presence? ”

Outstanding Execution to Achieve Impact:

When companies begin looking at fast-growing emerging-market cities, five key issues need to be tackled to help ensure success:

    1. Identifying the right go-to-market model for each location.
    2. Determining if there is a need for local-offer customization.
    3. Ensuring global customer service.
    4. Gauging a need for organizational changes in the longer term.
    5. Choosing how to deploy or redeploy resources.

The global paradigm shift driven by emerging-market cities is posing similar questions for Western companies for many different industries. For luxury players, cities probably matter more than for any other product category, and as retailers, most have the “luxury” of choosing, at a very granular level, where and when to open or expand a store…

In this context, Luxury Players are uniquely positioned to pioneer this new approach to accelerate their growth…!!

“Value of Packaging-Industry is INR`70,000 crore” Business in India | FnB News

The #FoodProcessing, sector probably is exclusive in respect of using the most varieties and forms of #Packaging & #PackagingMachinery….In a Interaction with Secretary-General, Institute of Packaging Machinery Manufacturers of India, spoke about the packaging industry in India and emerging trends. Excerpts :

What is the current value and growth of the packaging industry in India compared to the world?

The value of the packaging industry is estimated at Rs 70,000 crore. This however is very low compared to the global industry value placed at around US$600 billion. Of this, 20% is accounted by Asia region with Japan and China in the lead. The per capita consumption by spend is only one seventh of the world average clearly indicating the potential for the growth and opportunities for the packaging industries in the country..

What is the potential of packaging industry in India with respect to the food processing sector ?

As it is true of the situation in most countries, around 50% of the total packaging production is consumed by the food sector. The food sector probably is exclusive in respect of using the most varieties of package types and forms including machinery…!!

Does India rely on other countries for its food packaging needs ?

The food sector primarily caters to the domestic resources of packaging materials/packages.  Whereas they also source specific technologies and packaging machinery and system for higher ends and exclusive needs.

What are the recent developments in the food packaging industry of India?

The industry has witnessed considerable new trends moving from simple pre-packaging to vacuum packaging, gas flush packaging, CAP/MAP (Modified-Atmosphere Packaging / Controlled-Atmosphere Packaging), smart and intelligent packaging, retort and asceptic systems, barcoding and RFID (Radio-Frequency Identification) and various types of collation and unitisation are specific areas of interest.

What are the operations and challenges involved in food packaging?

Food packaging lines vary considerably depending on the product state, quantities required, variations in the product characteristics etc. The retail and consumer end needs like dosages and conveniences also play a role. FFS (form fill seal)-vertical and horizontal, thermoform-fill and seal, lined carton system, stand up and spouted pouches, flow wraps are typical in this industry.

What are the types of packaging formats used for various food products?

The varieties of packages vary from simple PP (polypropylene) bags to high barrier packages and  asceptic packages. Single layer polyolefin bags to pouches, 2-5 /7 layer flexible laminates, 2-9 layer multilayer films, thermoforms from PS (polystyrene), PVC (polyvinyl chloride), PET (polyethylene terephthalate), PP, PE (polyethylene)and co-extruded structures besides semi-rigid and rigid metal, glow, plastic formats are very common types of packages used by the food sector. These primary packaging media are supplemented by a group of ancillaries like labels, caps and closures, wads, and reinforcements. Developments in these areas are indeed very commendable like dosage caps, smart labels, security/tamper identification labels, coding and marking systems, child-resistant and elder-friendly caps.

How balancing of innovations and risks are important in the packaging industry with examples?

Innovations within the industry and value-added packages are specific areas where possibly the packaging industry has tremendous scope. Responsibility lies both between the package buyers and package suppliers. No doubt this is cost-oriented but soon will become an entity if the industry has to become more and more competitive. India being identified as a good source for development and supply has therefore necessarily to acquire the infrastructure and buildup as a good and dependable source of recognition, globally.

What are the challenges faced by manufacturers of food packaging?

Both package conversion and packaging operations are considered reasonably developed. The existing level, however, need to be constantly updated towards higher technology levels. Opportunities are open for improvements and new material and material combinations with higher functionality. It is equally true of the machinery sector in terms of versatility, ergonomics, eco-friendliness, reduced turnover time, pollution-free, easy changeover and multi-product oriented.

How food packaging plays a role in safety and health standards of food materials?

Food needs to be safe and nutritious. More scope exists and innovation opportunities are higher in packaging possibilities. Consider the global scene – the one point agenda is to save food and reduce losses and make food available to all irrespective of season, location and at uniform price. The FAO/UN (Food and Agriculture Organisation/United Nations) has estimated that about 1.3 billion tonne of food is wasted. Poverty alleviation and removal of famine is only possible if such waste is curtailed. The common enemy seems to be “mindset,” lack of education or importantly poor understanding of the benefits or inadequate convincing and persuasion.

Comment on how flexibility factor will change the future of food packaging industry :

Primarily the laws and regulations should be clear and this yardstick can have no tolerances.  Standards and specifications should be drawn up both in respect of materials and process and details  should appear on the packages. If the system needs to be effective monitoring at the manufacturing / processing sites may not be enough. Market samples should be drawn and quality inspection should be done. Any malpractices or shortcomings or deviations should be dealt with expeditiously with stringent punishments. This cannot be a mere fear complex but an effective baton.

What are the issues about which manufacturers of food packaging have to be cautious?

Primary issues related to package manufacturing are raw material quality, process of manufacturing   site conditions, machinery and system, quality of output and their conformity to requisite standards  and specification complying to statutory and other stipulations.

How Automatic Identification and Data Capture (AIDC) is important for the packaging industry from a consumer point of view?

Consumer safety, health and hygiene being the core of food, food processing and packaging all data right from procurement, in-site manufacturing and supply chain are extremely important and essential. Coding and marking-barcodes/RFID and AIDC are helpful tools in this direction.

With new food mix and products emerging, what is your message for manufacturers and traders involved in the industry?

Product mix – in-depth and width will have to expand. Substitutes and alternates and modifications are part of the game. They will continue to be on the anvil all the time. RTE (ready-to-eat), RTC (ready-to-cook), RTP foods are typical examples. This is irrespective of the food sector – meat and meat products, dairy, flour-based foods etc.

There can be no single answer for packaging needs of these. Also a given package cannot be the answer for all foods and all market conditions. Each product needs to be treated on its own merit considering its characteristics, shelf life, supply chain conditions. It also should be noted that “a package” is a good vehicle and guardian. It will keep the product as it is processed and packed, and therefore ”what is put inside” and “at what conditions” are equally important.

What are the new trends in raw materials used for packaging and how eco-friendly are they?

Lot of discussions are seen in respect of bio-friendly packages. They are debated under different heads. Commercialisation always is governed by availability and cost. These probably are the constraints. Possibly more inputs are needed. Polymeric and coatings( barrier) will find more applications.

What are the challenges and responsibilities in front of the new government to help the packaging industry?

The packaging industry has been under various constraints which affect its expansion and growth.  Most of the converting sector were under the reserved category. The shift in early 1990s clearly paved the way for their expansion and modernisation and over the last and half decade one could witness the sea change. The trend set in will continue. The country still processes a very low percentage (less than 5) of the fresh produce. The scope is indeed very large and would have large influence on the packaging sector. With the retail sector growing at a reasonable pace and shelf- ready packages becoming more popular / necessity the demand for packaging will also increase in a good pace. Although the changing lifestyle, small families, more working women, demand for more and more convenience packages have shown a direct impact on the packaging needs, the cost inputs for packages in a packaged food does not seem to encourage large-scale shift, yet…Having identified “food processing” as a priority sector and a large number of financially-assisted programmes put in place by the government, the momentum needs to be augmented…

The Foregoing could throw up quite a few measures-industrial and fiscal that the government could review : 

  • Encourage processing and packaging centres at the orchards level.
  • Create a part of above as exclusive export oriented.
  • Provide financial assistance for setting up state-of-art processing and packaging centres and review fiscal aspects.
  • Create and enlarge the cold chain supply systems.
  • Set up quality assist centres at processing & packaging centres with emphasis for those at orchard levels.
  • Review the contribution of cost of package to the final product selling price and the part of the duties and levies.
  • Given the current situation and needs – review the fiscal levies to reduce its impact on the final product pricing to increase volume of processed food packaging.
  • Encourage developments in source reduction and make packages more eco-friendly.
  • Encourage easily recyclable and reusable packages.
  • Introduce and expand returnable packages (deposit scheme).
  • Fiscal incentives for those falling under the above schemes.
  • Can the fiscal support include tax holiday system with built-in conditional aspect on steadily increasing volume of packaged foods.
  • Encourage R&D / Innovation in packaging and extend financial support for those bringing in advantages for the consumers adopting state-of-art technologies and materials.

Consider special incentives for SME (small and medium enterprises) sector in the above areas….

The underlying principle and aim should be “Food Safety,” Food Preservation & Packaging…best suited for Tropical Countries and those with Higher Storage & Distribution cost…Such developments in all Types of Packaging – across the cross-section – will add to the choice to meet varying market segments. Packaging food more securely with high productivity and extended shelf life are the technology endeavours today…!!

“Large Mixed-use Retail Schemes” are the Most-Desired Style of Projects in Indian Real-estate space | ET Retail

Malls in India and elsewhere are increasingly becoming #LifestyleDestinations, posing challenges for #MallDesigners, as they need to create retail properties that engage, are cost efficient and sustainable…From mixed-use developments to family entertainment centres (#FEC) to streets and squares–such as those in Dubai–mall designers are constantly trying to innovate with #RetailFormats…Head and director of UK-based mall design firm, spoke on the latest trends in mall design…The company has designed #ShoppingCentres, in India such as DLF Place in Saket, Delhi, Phoenix Mills in Mumbai and Pacific Mall, also in the National Capital Region(#NCR)..!! 

Going by your experience of designing malls in India and abroad, what are the latest trends internationally that define shopping complex properties today?

The latest trends which we are seeing reflect the changing Global #RetailLandscape…#Consumer Demands are shifting because of the growth of #e-commerce, and designers must now create retail developments which entice shoppers beyond shopping. Creating a retail environment that is as much about leisure, as it is about retail, is essential..

Retail environments need to be in tune with and fully embrace developing lifestyle choices. Visitors should be able to enjoy a much broader experience, rather than be limited to simply shopping alone. Benoy is seeing many more mixed-use developments, which incorporate retail alongside other elements such as residential and commercial offices. These can become iconic structures that also encourage a variety of activities in the shape of leisure offers, entertainment and dining, and which ultimately create a destination. Any great mall design should also be flexible and adaptable so that it can compete with future competition, which employ the most advanced technology.

What kind of retail format has the highest demand in India, according to you– kiosks, speciality retail formats, large size formats etc.

The larger mixed-use retail schemes are the most desired style of projects in India at the present, but there is not a prevalent style or format for retail. Our schemes illustrate a mix of unit types, creating a balanced retail offer. Moreover, because India is so large and diverse, it is hard to define one style of retail design which will be successful and attractive to all areas of the country.

Always approaches India as a continent rather than a country due to the sheer magnitude of the market…The firm understands that what works well in one city may not necessarily translate to another in terms of look, feel and scale. As a country with a wide range of people, finance and consumerism, it is imperative to understand who the regional client is. As designers, Benoy is also very mindful of the natural surroundings and the history of the city.

When it comes to controlling costs of mall construction and design, how can a mall developer cut down on the expense of designing a mall yet make it more consumer friendly?

In other parts of the world, there is a defined trend towards retail developments that are either enclosed malls with natural ventilation strategies or which are open to the environment. Both allow the developer to reduce initial capital expenditure and ongoing running costs, particularly where mechanical conditioning is concerned. Of course, these strategies are not applicable in all parts of the world, yet even in Dubai, a part of the world with an aggressive environment during its summer months, there is a new wave of ground breaking open street developments – streets and squares, if you like – that are setting new benchmarks in sustainable developments. So in parts of India with a benign climate, such strategies should have a role to play.

Also seeing an emphasis of simplification of development so that the nature of the construction is cost efficient. That is not to say that developments should be visually bland or banal, rather that the architectural solution hides an efficiency of construction.

What is the contribution of the mall developer when it comes to facilitating a mall design and construction? Do you think Indian mall developers are up to the mark in that respect ?

Is seeing a wide variety of retail developments across all parts of the Indian retail scene. Of course, like elsewhere in the world, not all projects are world class, but there is a fast developing industry which is devouring new ideas and strategies.

In this, the developer is key. Despite the importance of the statutory authorities, the developer controls the funding, design and construction streams like the conductor of an orchestra. Their role is crucial in setting the tone and direction for any project.

Which international trends that have been extremely popular can be adopted in India according to you?

India is becoming an extremely popular market for foreign companies because of the opportunities on offer…This has led to a highly competitive environment, which is fantastic for driving growth but does highlight the need to have an established brand that sets you apart from your competitors. The recent global downturn has led to developers spending more wisely and they are becoming more selective about the partners they identify as bringing the most value to developments. As designers, it is essential that we offer beautiful schemes that are commercially viable.

Internationally, the rise in dining as an important component of any development has been well documented and it is an important trend that will define the nature of Indian retail developments over the coming years. Out will go standard, run-of-the-mill food courts to be replaced by higher-quality food villages and individual restaurants – dining will be an important anchor..

What are some of the top observations on Indian shoppers according to your psychographic studies?

As an #EmergingMarket, India has the advantage of being able to look to other countries and evaluate what works well. India, therefore, has become a platform for some of the most ambitious designs currently being actioned and offers one of the most exciting retail environments…

Shopping in India is therefore no longer a requirement, rather a choice – a leisure activity – has observed that Indian shoppers take great pleasure in the social aspects of “#RetailTherapy”…Whether Indian shoppers are couples, groups of young people or families, the social aspect of shopping is important and will continue to become more important over the coming years…!!

“Flipkart vs Amazon” : “How they Stack up in India” | VCCircle

” Amazon chief Jeff Bezos says that at the current scale and #GrowthRates, India is on track to be its fastest country ever to reach $1 billion in Gross Sales…”

The big daddy of #OnlineCommerce, in India hit a new milestone bagging a record $1 billion in Fresh #Funding…In less than 24 hours of this announcement, the one thousand pound Gorilla of selling things online, Amazon followed it up with $2 billion in Fresh Investment commitment in India…!!

Mind you, in the #ServicesBusiness, paying salaries to employees and adding human skill set are also considered investment and with both firms employing thousands, a good chunk of this money could be simply about paying wages (though Flipkart has said it’s looking much beyond using investors’ money to burn in existing operations)…Moreover, this could also include the imputed value of discounts to be offered to consumers…

Nevertheless, the numbers are huge and have just raised the decibel levels in the Indian #E-commerce, sector…Here we attempt to glance at how Amazon & Flipkart, are stacked against each other when it comes to India in terms of some comparable Metrics and other Features….!!

Products on offer:

Amazon claims that in just over a year it had pooled in vendors to offer as many as 17 million products on its site. It has not clarified whether this represents #StockKeepingUnits or #SKUs, but that is what it most likely means…#Flipkart, which has been in operations for almost seven years now, looks to be on a weak wicket here as its latest communication says it stocks over 15 million products. #Snapdeal is far behind with over 5 million products…!!

Indeed, what really matters is how much they are able to sell, but in terms of offering to the #Consumer, Amazon seems to have done a much better job and far quicker too..

#Amazon, does not share finer details about how many users it has in India ; so that one is not comparable…Flipkart, in contrast, says it has 22 million registered users clocking over 4 million daily visits and is delivering 5 million shipments a month, which in itself is huge…

Who Sells More ?

Flipkart said early this year it has hit the milestone of $1 billion #GrossRrevenue (#GrossMerchandiseValue or #GMV) run rate (which means based on monthly sales on its site it is set to cross $1 billion in GMV over the next 12 months (though its latest official communication erroneously says it has become the first Indian e-com firm to hit $1 billion in GMV)…

Amazon, though public listed, does not share India-specific numbers but its founder and chief Jeff Bezos has just said that at the current scale and growth rates, India is on track to be its fastest country ever to reach $1 billion in gross sales. It is estimated that it took it years to cross the revenue benchmark even in China, where it has been present since 2004 and another market dominated by local giants…But it would be fair to assume that Flipkart currently outsells Amazon..

Interest in Virtual World:

This one is somewhat superfluous but we look at it to get some additional insights. Rather than looking at Alexa (which is dismissed by many as not too accurate) or comScore (which we don’t have access to), we considered Google Trends to see how the two sites stack up against each other…

As the graph shows, Flipkart has been under the radar for over five years but really took off only three years ago and with momentary blips has been on an ascend. Amazon has been growing at about the same pace as Flipkart after its launch in June 2013… However, it seemed to have gained pace in April this year and surpassed Flipkart and though the gap has narrowed since then, it seems to have stayed at the top this month too.

Amazon Prime vs Flipkart first:

Not much of a comparison really, as Amazon Prime, the paid membership programme of Amazon, is not yet present in India. However, Flipkart has got a head start with launch of its own version of the premium membership last month. Though its benefits are limited to one vendor (more on that later), it manages to stand up against Amazon’s Fulfilled by Amazon service under which consumers are already getting free deliveries for majority of products sold on the platform.

Flipkart First (at present in a free trial period for randomly chosen members) is currently limited to free or subsidised delivery benefits for a section of its product assortment besides an early access to hot products.

Where the battle may be won, however, is other bling factor in terms of digital content strapped for free. Amazon already offers such content for its Prime members and early this year paid a bomb for a package of shows from HBO which now comes free to its premium members. It also offers movies, music on the go and free e-books for its Kindle users as part of the membership.

Flipkart has got the platform to redo this. But having tried and exited digital music store it would be a challenge for it to sew such content deals going forward…It remains to be seen by when Amazon would roll out Prime membership in India.

X-Factor:

One crucial thing in the e-com war could be the key vendor on the sites. In the case of Flipkart it is WS Retail, which used to be the in-house and sole seller through the platform before it turned a marketplace early last year. This firm is owned by an angel investor and employees of Flipkart, to comply with FDI norms. However, this is a key player for Flipkart….Although, the breakup of sales from WS Retail and other vendors is not in the public domain, it is estimated that the bulk of its sales are through this vendor (it also happens to be the partner for Flipkart’s run away hits like Motorola Moto series of handsets)…WS Retail also happens to be a key spoke in its Flipkart First offering, at least for now…

Amazon is still dependent on its third-party vendor base to sell in India. However, it has reportedly sealed an unconventional deal with Catamaran Ventures, the private investment arm of Infosys co-founder N R Narayana Murthy. Catamaran is holding a majority stake in a venture which is supposed to work at the back-end of operations for Amazon in India. However, this is seen as the first step for preparing groundwork for Amazon to start selling in India on its own as and when (as anticipated soon) multi-brand online retail is brought on par with offline retail in terms of FDI norms.

This could really pump up the activity for Amazon and take the competition right to the door steps of Flipkart….!!

Apparel:

Flipkart has strengthened its apparel vertical, one of the juiciest part in terms of margins by acquiring Myntra early this year. Although Amazon also has launched apparel section, Myntra provides a strong positioning and vendor base to Flipkart which can be important going forward.

Myntra remains a separate site but its chief is now involved in strategy making for Flipkart’s own apparel vertical and that can help the firm boost sales from this segment going forward.

To be fair, Amazon may well acquire a Myntra rival (say, a Jabong, for instance) to plug this gap that would be dependent on nifty deal structuring.

Reviews, #VendorServices, Fulfilment Centres:

One differentiator for Amazon globally is its enviable consumer reviews, which helps a prospective buyer to decide in their purchase decisions. Flipkart too has built a strong review database and in many cases has a far comprehensive review section compared with Amazon’s Indian marketplace.

If customer acquisition was key metrics to focus for Flipkart or for that matter any internet commerce firm to begin with including Amazon, now add vendor acquisition to it.

The future pace of growth for both be partly if not fully dependent on how fast they add sellers to their platforms. A factor determining this would be how smooth Amazon or Flipkart offer to get their products to the consumer. This would in turn be dependent on the fulfilment infrastructure and logistics services offered by the two firms. Both Amazon and Flipkart have their own logistics units unlike many other horizontal e-tailers in India and vendor addition could be based on who takes the minimum fee or cut from the sale of products on the site. This is where the money aspect comes in where the fresh funding announcement of Flipkart and additional investment by Amazon make them even-steven.

Meanwhile, Amazon has just announced FIVE New #FulfilmentCentres, in India which would take total such facilities to seven in the country…Flipkart has FOUR such Centres at present and is also looking to expand the number…!!

We will get more insight on how the two firms are performing a couple of months down the line. So watch out this space for their actual revenues and growth in numbers…!!

“India Retail-Property Market” Overview | by: Vivek Kaul | ET Retail

The Retail #RealEstateMarket, in India has developed steadily over the past decade as the quality of stock improves and local developers realize the importance of Modern #ShoppingCenter Management, such as zoning, branding, marketing and promotions, as well as the all-important strategy of following a pure lease model instead of the earlier practice of divesting units to individual investors… This evolution has led to the creation of a number of high quality shopping mall developments in the major cities of Delhi, Mumbai and Bangalore which have set the benchmark for future retail schemes..

The adoption of rental models (such as revenue-sharing) has provided support to retailers in India seeking to establish themselves in the market, and has also enabled shopping mall developers to attract international and domestic retailers to set up flagship stores…!! 

Retail Real Estate Supply: 20072014 (P) : CBRE Research

In the run-up to the global financial crisis of 2008, around 300 new shopping centers were scheduled to be completed in key cities across India. This pipeline was decimated by the credit crunch, however, leading to a shortage of modern retail estate stock. In 2011, the development pipeline sprung back to life as construction work resumed on a number of projects. At the end of 2013, the supply of modern retail space across the country’s seven largest cities stood at about 54 million sq. ft. Around 70% of this space was in New Delhi, Mumbai and Bangalore…

Leading cities including New Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad and Kolkata have all seen a steady rise in retailer enquiries in recent years. Shopping mall rents in prime sub-markets of New Delhi have witnessed growth, while values in high streets have increased in Mumbai, Bangalore and Pune. Transaction activity as well as sizes are expected to increase on the back of an increase in consumer spending and expanding mid-income purchasing power. In Mumbai, premium international brands continue to focus on affluent southern parts of the city; but the lack of quality retail space remains a major challenge to growth. Despite the scarcity of quality supply, most retail chains continue to launch their first Indian store in Mumbai and New Delhi usually in a street shop or mall before expanding elsewhere. Even as domestic big box retailers gradually expand to tier II locations, the major foreign brands remain primarily focused on tier I cities.

New supply is steadily coming on stream in the NCR, and will provide opportunities for retailers to operate in an organized retail environment. High street formats continue to dominate the retail landscape, while most luxury retailers prefer to operate from five star hotels and premium malls. Bangalore has a large quantum of organized retail supply in the pipeline which will provide retailers with further opportunities for expansion..

Amongst #RetailCategories, international #F&B outlets have continued to expand in 2013 both at the fast food and fine dining ends of the market. Luxury retailers remain focused on tier I locations but continue to refine their strategy and product offering for the Indian market, which in selected cases has seen them consolidate and reduce the size of some stores. Fashion and apparel remains a high growth sector and major apparel brands from the US and Europe continue to seek opportunities to enter or expand in major markets across the country, including certain tier II locations…

Lack of Quality Retail Real Estate Impedes Market Entry by Global Retail Giants:

There is approximately 54 million sq. ft. of retail stock in India spread across leading metropolitan cities and their surrounding regions. Even after the steady growth in supply of organized retail space over the past ten years, however, retailers of the size of Ikea often find it challenging to secure space in a prime mall in any of these cities. This is essentially because the majority of retail space developed in India to date lags behind global standards, and does not provide the quality, ambience, design, services or post-construction maintenance that global retailers are accustomed to. This is one reason why out of the more than 300 malls in the country, only a handful can be described as successful retail projects. These include Select CityWalk, DLF Emporio and DLF Promenade in South Delhi, Ambience Mall in Gurgaon, Inorbit and High Street Phoenix in Mumbai, and Forum in Bangalore. The total size of these successful malls is just 45 million sq. ft. About 31% of the upcoming supply addition is expected to be centered in smaller cities such as Pune, Chennai, Hyderabad and Kolkata over 2014, with approximately 1011 million sq. ft. of organized retail supply lined up across leading cities..

According to research estimates, India will require an annual supply of about 20 million sq. ft. of organized retail space in order to sustain growth in the sector. This will necessitate a concerted effort from developers to construct successful shopping centers to global standards. However, domestic developers are still in the middle of a steep learning curve with respect to undertaking shopping center development. Many developers view shopping centers simply as another asset class, no different from building offices or housing units. In fact, shopping centers have an organic and perpetually changing quality that needs to be planned, developed, owned and managed as a single property..

It is in this context that the role of global #RetailChains, such as Tesco and Ikea will be crucial….These retailers possess extensive experience of running successful retail stores and properties in markets like the US, China, Europe, Middle East and South East Asia, with local partners to create successful shopping formats..

By utilizing this knowledge they will be able to help usher in a revolution in the development of organized retail real estate in India..