Caroline Perry, Drapers
\n London, April 20, 2013<\/i><\/p>\n
![](\"https:\/\/www.thirdeyesight.in\/wp-content\/uploads\/2022\/09\/india-drapers.jpg\")
With \n a youthful population, and growing affluent middle class that \n is projected to grow tenfold by 2025, retailers have long eyed \n up this vast country as one ripe for expansion, but it has remained \n a complex proposition with many challenges.
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"There is still a lot of low-hanging fruit in India," \n says Ira Kalish, head of consumer business at consultancy Deloitte. \n "But the retail market is still dominated by family-owned \n stores. Only about 15% of the market is modern retailing."
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This slow growth has been due to India previously being closed \n to foreign direct investment. Until the beginning of 2012, retailers \n interested in opening in India had to do so with a partner, as \n regulations only allowed them to own 51% of their Indian business.
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While such regulations remain in place for multi-brand retailers, \n single-brand retailers can now own 100% of their operation, although \n there is a stipulation that the Indian arm of the business sources \n 30% of its stock from small to medium-sized Indian suppliers.
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Devangshu Dutta, chief executive of management retail consultancy \n Third Eyesight, says India accounts for about 10% of total sourcing \n for most international fashion brands: "We shouldn’t expect \n any dramatic changes, though we do expect the growth in joint \n ventures and subsidiaries to continue in the coming months and \n years."
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Having a local partnership can also be key to navigating India’s \n complex foreign trade and legal regulations, says Jonathan Coates, \n relationship director for fashion, retail and wholesale at Natwest\/RBS \n banks. "Local expertise is key if you’re looking to export \n to India but you must research potential partners properly first."
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According to Dutta, there are about 10 groups that work as \n franchisees, licensees and joint-venture partners to a substantial \n number of international brands in the market, including franchise \n operator Future Group, retail giant Reliance, textile business \n Arvind and smaller entrepreneurial companies such as Genesis Luxury.
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Footwear retailer Clarks formed a joint venture with Future, \n India’s largest retailer, for its launch into the market in 2011. \n Although that predates the regulation change, Andrew Martland, \n Clarks’ president for Asia Pacific, says it has no plans to change \n strategy: "We wanted a partner that understood the dynamics \n of the market, such as where to actually locate the stores. There \n was so much mall development at the time – we wanted to make sure \n we picked the right malls. Plus a local partner has bargaining \n power with the landlords."
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Clarks has 26 stores across nine major cities, including Delhi, \n Mumbai and Bangalore. The majority are located in shopping malls, \n although it does have some high street locations. Its first store \n opened on a big shopping destination street in Delhi, which Martland \n said was a statement location for Clarks when it opened.
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Clarks’ experience mirrors the kind of property availability \n there is in India, with malls and shopping centres increasingly \n popular. During the boom years, from 2004-08, retailers had to \n speculatively rent space to ensure they would get into the right \n locations, but real-estate costs have risen and more conservative \n growth in recent years means retailers have become more selective.
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Meanwhile, Dutta adds: "I would say the ability to evaluate \n site feasibility is a bigger issue than availability of sites."
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Clarks’ partnership with Future also gave it access to its logistics \n business, FutureLogistics, which handles its physical stores. \n This allowed Clarks to avoid dealing with India’s fragmented logistics \n market. Although, the footwear retailer recently appointed a specialist \n ecommerce logistic partner to service its website, which launched \n at the end of last year.
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Dutta says it is common for retailers and brands to use a \n combination of logistics operators. "A majority of retailers \n blend services of large and small third-party logistics operators, \n especially if their store network is dispersed across the country."
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There are mixed reports on the reliability of India’s infrastructure, \n with the majority suggesting it is comparatively poor, although \n Martland contests it is developing quickly with a motorway network \n "of sorts" and improved airlines.
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Anita Balchandani, partner at OC&C Strategy Consultants, \n believes the non-food infrastructure is at an early stage, which \n means there are difficulties in the last-mile service for retailers \n considering online as a way of testing the market. India has a \n nascent ecommerce business, which is expected to be driven by \n mobiles rather than desktop PCs. <\/p>\n
Import duties are quite high, particularly for footwear because \n it has a big domestic manufacturing market and is seeking to protect \n it. "Customs and import is complicated," says Martland, \n who adds that it is a difficult regulatory market, even for getting \n shops and establishment licences for each store. There is also \n a complex tax structure and, for many retailers, the level of \n bureaucracy can be overwhelming.
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To succeed in India, there are certain things specific to Indian \n consumers such as the demand for a range of styles driven by the \n regional differences in weather, says Martland. "There are \n lots of brands that have come to India – some that are successful \n and some that aren’t," he explains. "It is those willing \n to adapt that survive."
\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Caroline Perry, Drapers London, April 20, 2013 With a youthful population, and growing affluent middle class that is projected to grow tenfold by 2025, retailers have long eyed up this vast country as one ripe for expansion, but it has remained a complex proposition with many challenges. "There is still a lot of low-hanging fruit […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2365","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n