Luxury Retail Market India

Luxury Retail market

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Consumer Buyig Behaviour (Apparels)

Top 20 cities which retailers eye for..

Megacities – Eight megacities – Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune – garner the lion’s share of attention as India’s consumption centers. These are the country’s largest population centers (all have population above 5million), and in most cases they are the largest markets in terms of household income and total consumption expenditure.

Boomtowns – In terms of total consumer markets, the boomtowns are the emerging cities that are quickly moving up the ranks as the largest markets following the megacities. This group of cities has younger populations and has posted the fasted growth in disposable income since 2000. Cities in this group include Surat, Kanpur, Jaipur, Lucknow, Nagpur, Bhopal and Coimbatore.

Niche cities – Niche cities are somewhat smaller in terms of population but still hit well above their weight in spending per household. Household expenditure in these cities is nearly the same as that found in megacities, and niche cities have the highest marketing propensity among the three city groups. Faridabad, Amritsar, Ludhiana, Chandigarh and Jalandhar best represents the niche cities.

          These 20 cities together account for 10% of India’s population, but generates 31% of disposable income and 21% of total spending. More than half (55%) of total urban income is generated by these cities, with megacities accounting for 45% of urban expenditure. Boomtowns and niche cities today may be much smaller in terms of income and spending weights, but they are growing rapidly. The household income growth for these cities is estimated to at 11.2% between 2005-08.

Changing Reatail Scenario

Changing Reatail Scenario

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Eye-wear market (INDIA)

          Eye-wear market (India)

       Eyewear is at the forefront compared to the global markets where vision care has a strong presence. A near stagnant market has been converted into one of the fastest growing industries recording a 20% growth annually. Nevertheless, in global terms the industry in India remains underdeveloped even today. The Indian markets account for about 1% of the world’s consumption. With the increase in the level of the self-awareness among the consumers, the emphasis is more on the look of the glasses and the image the customer seeks to create. There has been a noticeable shift in consumer purchases for eyewear from form and function to form and fashion.
 Indian eye-ware market is estimated Rs 1,500 crore In India. 
 Growth rate is between 15-20 per cent annually.
 The organized segment contributes about 19 per cent to the overall eyewear market.
 Within the organized segment, the share of sunglasses is around 40 per cent.
 Branded sales contribute about 70 per cent to the overall sunglasses market.
 Spectacles and sunglasses are used by over 1/3rd of India’s population & a wide range is available to cater to the vanity of the consumers.
 The sunglasses market is estimated at Rs 4.8 billion. It is projected to grow over Rs 11 billion in the next five years.
 This market is highly polarised with concentration either at the upper end of the market (the organised segment) or at bottom price points.
 There are limited branded options in the middle price range.
 Fastrack sells 500,000 sun glasses a year, and the company expects an annual business of around Rs.4.5 billion ($112.5 million) in the next five years

      

        In past few years, the awareness of consumer towards branded eyewear products and eye care has been increasing and people are ready to spend on premium brands. In fact sunglasses are now being looked at, more as a fashion device rather than a protective device with the entry of international brands like Ray Ban, Benetton, Gucci, and Police etc. 

        The sunglasses and spectacle frames business in India has great potential with only a few organized players like Luxottica (with their Ray-Ban products), Fastrack
        The high duty tariff of around 63% on the optical products is acting as a deterrent for serious business players and encouraging grey market growth. Since there is no local manufacturing of optical wears in India the high duty tariff really makes no sense. And the grey market is leading to loss of revenue to the government. 
        There are several other international brands of sunglasses & frames available in the market. These are either smuggled into the country or are job lots purchased by local opticians on their visits abroad. Though the grey market supply is regular, the product range available is very limited. In addition, these products have no consumer awareness or advertising support guarantee and it’s sales & brand image are dependant solely on the retailers sales staff. The current eyewear market is made up of products retailed above and below Rs 1,000 a pair. The first segment, i.e. over Rs 1,000 a pair, is the premium segment and is placed at a sales turnover of about Rs 100 crore. Taking an average price of approximately Rs 1,500 per pair, this works out to a market size of about 6,50,000 pairs/year. Ray Ban, Safilo, Allen Solly, Van Heusen, Luxottica,Fastrack, Baush & Lomb, Johnson & Johnson and Colorsoft, are the organised companies in the eye-wear/eye-care industry in India who manufacture or import premium eye-care products into India. 
        In the second segment, i.e. retail prices under Rs 1,000 a pair, we have several local brands. However lately the bulk of this segment has been taken over by frames & sunglasses from Taiwan, China, Hong Kong & Korea. 
        The optical retail business is estimated to be approximately 2,300 crore. It is anticipated that the impact of the WTO regime will result in the flow of a larger variety of brands through formal channels in the near future. It is also expected that duties will get lower over the next few years facilitating entry and variety. 

Footwear Industry (India)

                                 Footwear Industry (India) 


                         Demand for high quality footwear produced in Europe and other parts of the world is expected to slow-down as people will look for medium or lower priced products. This is a good sign for the Indian footwear industry since India along with China is the main supplier of low-priced footwear. However, Chinese producers are facing serious problems due to rising labor cost, which has risen by around 40 percent since January 2008, and currency appreciation. Chinese products, which used to be cheaper by around 10 percent compared to the Indian products, are no longer cheaper.
                          Under these circumstances, India is a source for supplying medium and low-priced footwear. Moreover, most of the global footwear manufacturers, particularly European manufacturers who were sourcing from China, have now turned to India. Nike, Adidas and Puma are some of the footwear majors are expected to route parts of their production and purchase out from China to India.
                           The annual domestic consumption of shoes in India is 1.1 billion pairs and it is estimated that the footwear market is around Rs 10, 000 crore and will grow at 10% pa, this offers great opportunities for a company like Bata to expand.
  > India produces 2065 million pairs of Different Categories of Footwear 
  > Leather Footwear 909 million pairs
  > Leather Shoe Uppers 100 million pairs
  > Non Leather Footwear 1056 million pairs

Exports – 
 
% Share of Leather Products in Export Performance  
(Council of Leather Exports)

Export Targets for footwear (In Million US$)
2008-09        2009-10        2010-2011
2597.60          3428.83           4526.05



Brands in Indian market –             

                    >MNC Brands sourced from India

Reebok, Laurent, Acme, Ann Taylor, Bally, Charter Club, Clarks, Coach, Colehann, Daniel Hector, Deichmann, DKNY, DOUBLE H, Ecco, Elefanten, ETIENNEAIGNER, Florsheim, Gabor, Geoffrey Beene, Guess, Harrods, Hasley, Hugo Boss, Hush Puppies, Kenneth Cole, Liz Claiborne, Marks & Spencer, Nautica, Next, Nike, Nunn Bush, Pierre Cardin, Salamander, Stacy Adams, Tommy Hilfiger, Tony Lama, Versace, Yves St.

                    >MNC Brands Sold in India
Adidas, Aldo, Bally, Clarks, Ecco, Florshiem, Ferragammo, Hush Puppies, Lee cooper, Lloyd, Marks & Spencer, Nike, Nine West, New Balance, Reebok, Rockport, Stacy Adams, Levi Strauss , Lee Cooper, Puma, Bata

                    > Indian Brands sold in India

 Red Tape, Liberty, Khadims, Lakhani, Metro, Action, Provogue, ID, M&B Footwear, Firangi


Facts about Indian Footwear Industry-
 The Indian footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011.
 Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07.
 Presently, the Indian footwear market is dominated by Men’s footwear market that accounts for nearly 58% of the total Indian footwear retail market.
 By products, the Indian footwear market is dominated by casual footwear market that makes up for nearly two-third of the total footwear retail market.
 The Indian footwear market scores over other footwear markets as it gives benefits like low cost of production, abundant raw material, and has huge consumption market.
 Lee Cooper shoes are recognized as the market leader of Casual Footwear, for both Men & Women.

Existing Footwear Chains - Domestic:
> Bata India Ltd: Bata India is the largest company for the Bata Shoe Organization in terms of sales pairs and the second largest in terms of revenues, with 1250 stores across the country. By the time Bata had come to India in 1931, it was already recognized as a leading shoe brand. Its manufacturing and marketing operations heralded the rise and the development of a modern footwear industry in India. Today, backed by a brand perception of experience, the company is working towards positioning itself as a vibrant and contemporary young brand. It has significantly transformed its retail formats to become more lifestyle-oriented, which has helped change consumer perceptions to a large extent. The company currently sells over 45 million pairs of shoes every year and has an annual sales turnover of more than Rs 8000 million.
> Reliance Footprints: A specialty footwear store offering formal and sports wear in men, women and children's footwear, was launched in Hyderabad and Bangalore. They launched another Footprint store in New Delhi.
> Woodlands: The brand Woodland was introduced to the Indian market in 1992 through two exclusive outlets in New Delhi. At present, there are 200 exclusive Woodland stores across the India in addition to a distribution network covering over a thousand stores across the country.
> Action: Action Shoes has more than 5,000 retail outlets all over India. Action also has exclusive showrooms in Jammu & Kashmir, Himachal Pradesh, Punjab, Haryana, Uttaranchal, Delhi, Uttar Pradesh, Bihar, Rajasthan and Madhya Pradesh.
> Khadim's: Khadim India Limited forayed in footwear retailing in 1993. it has more than 260 Exclusive stores out of which 52 are owned by the company and the remaining are exclusive dealers are located across 22 states.
> Liberty: Liberty Shoes Ltd. has more than 365 retail stores across India. Liberty markets its products are the network of 150 distributors, 350 exclusive showrooms.
> M & B Footwear: Delhi-based M&B Footwear has 75 stores including 26 exclusive concept stores located in premium malls and high streets and 6 shop-in-shop modules placed within Central and Pantaloons. The company's brand portfolio comprises of Lee Cooper, ID, Provogue, Geox, Firangi, Rider and MB Sports. The company has planned to open 100 stores by 2008 and take it to 275 stores by 2010.
> Red Tape: Red Tape is the flagship brand of Mirza International. It was launched in 1996. Red Tape retail markets its products through multiple brand outlets, chain stores and exclusive Red Tape showrooms. Its countrywide network of exclusive showrooms spans 30 cities in India.


Existing Footwear Chains - International / MNCs:
> Crocs India: It is a US footwear brand, launched in India in 2007. At present, the company retail products through 500 stores across India & also selling through 5 company owned stores in metros like, Delhi, Mumbai, Pune and Gurgaon.
> Adidas: German sportswear and apparel major Adidas is planning for a major expansion across India in 2008, which would involve setting up around 160 new stores. Post the planned expansion, Adidas would have 450 franchise stores and presence in 140 cities as against 119 cities currently.
> Nike: Nike entered into India through a seven year license agreement with Sierra Industrial Enterprise. In 2004, Nike Inc formed its 100 per cent subsidiary, Nike India. Nike has 1,000 retail outlets including exclusive stores and shop-in-shop.
> Reebok: Reebok India is planning to expand its retail presence in India by the end of 2008. The number of exclusive Reebok stores is expected to go up from 675 to 800 by December 2008. The company has plan to tap tier II and Tier III cities. Reebok is planning to add 55 new lifestyle stores by the end of this year.
> GUCCI: GUCCI has 2 stores in Delhi, 1 in Mumbai and 1 in Bangalore it is planning to open more stores in other metros.
> Carlton London: UK's shoe brand Carlton London operates 7 stores in Ludhiana, Gurgaon, Noida, New Delhi.



Factors that make Indian Footwear market attractive -
  > Low Cost of Production
  > Variety & Abundance of Raw Material
  > Large Domestic Consumption Market
  > World Class Institutional Support for Designing & Testing
  > Growing Fashion & Brand Consciousness
  > Rising Living Standard
  > Increasing Use of Credit Cards
  > Government Support
  > Low brand loyalty in case of casual wears. 

Indian Reatil Market at a Glance

                    Indian retail market at a glance
         The Indian retail market is the fifth largest retail destination, and it is ranked second after Vietnam as the most attractive emerging market for investment in the retail sector by AT Kearney's seventh annual Global Retail Development Index (GRDI), in 2008. The share of retail trade in the country's GDP was between 8–10 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010. 
         A report by AT Kearney said "The consumer spending in India has increased by an impressive 75 per cent in the last four years and will quadruple in the next 20 years." Moreover, India recently topped the Nielsen Global Consumer Confidence study, conducted by Nielsen, a market research company. The report revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months." 
CB Richard Ellis' report states that India's retail market is poised to grow to US$ 833 billion by 2013. The report further stated that organized retail that currently accounts for less than 5 per cent of the total retail market is expected to register a compound annual growth rate of 40 per cent and swell to US$ 107 billion by 2013. 
          In a joint study recently conducted by ASSOCHAM and KPMG, the following findings were revealed:
 The total retail market size in India in 2008 was estimated at US$ 353 billion. 
 The annual growth of the retail market in India is expected to be around 8 per cent. 
 The total retail market size in India is likely to touch US$ 416 billion by 2010. 
 The present share of organized retail sector is estimated at 7 per cent. 
 The estimated annual growth of organized retail sector is 40 per cent. 
 The size of organized retail sector by 2010 is estimated to reach US$ 51 billion. 
 The estimated share of organized retail in total retail by 2010 is 12 per cent. 
 The investment into modern retailing formats over the coming 4-5 years is expected to be around US$ 25-30 billion. 

Growth still continues -

           Despite the global economic slowdown, Indian retailers are still optimistic about the India growth story. Speaking on the issue, Mr Tarun Joshi, CEO and MD of Brandhouse Retails said “Fashion retail has not been impacted in a big way. Not even 0.5 per cent of the working population has been hit in India.” The great Indian consumer market is still strong. Economic Times revealed that most mass consumer goods and service in India were not much affected by the global economic slowdown. Despite the inflation experienced during the period, the second-quarter results of leading 70 consumer-related firms revealed that their aggregate revenues increased by 8.5 per cent during the September 2008 quarter over the same period in 2007. Even though this was a tad lower than the 9 per cent growth posted during the first quarter of 2008-09, it was a lot higher than the 7 per cent registered during the previous three quarters for these firms.

 

IPR

                                                    IPR

“Anything created by human interference requires intellectual efforts and all human made things in this world are as a result of intellectual creations IPR relates to protection of such creations”.

Markets all over the world are opening themselves gradually for goods and services from other countries in this context the importance of IPR in global trade is increasing phenomenally. Millions of years ago humans evolved from hunter gatherers to agriculturists hence land symbolized wealth thereafter trade became an important wealth creation tool. If you are having 15 acres of land you can fence it off but if your market is regional, national or global then you need IPR to fence it. Every IPR is a sort of monopoly, normally in a perfect market condition monopoly is considered to be bad as monopoly distorts competition but IPR is an exception to the general rule against monopoly. In business monopoly becomes good or bad depending upon who is enjoying monopoly. If you are having legally sanctioned monopoly then it is the best thing to have but if your competitor is enjoying monopoly then it is bad for your business.  
Types of IPR’s – 
• Common Law IPR – For this registration is not mandatory. Like Trademarks, Copyrights and Geographical Indicators.
• Statutory IPR – For this registration is mandatory. Like Patents and Industrial Designs.
1. Patents -  
  It is a commercial monopoly granted by the state for any invention having industrial application. It is a grant which the inventor enjoys for 20 years from the date of filing the application. 
Biopiracy & Bioprospecting :
Biopiracy is a negative term for the appropriation, generally by means of patents, of legal rights over indigenous knowledge - particularly indigenous biomedical knowledge - without compensation to the indigenous groups who originally developed such knowledge. A classic case is that of the Rosy Periwinkle (Madagascar Periwinkle). Research into the plant was prompted by the plant's traditional medicinal role and resulted in the discovery of a large number of biologically active chemicals, including vincristine, a lucrative agent useful during leukemia chemotherapy. A method for purifying vincristine was initially patented and marketed by Eli Lilly. It is widely reported that the country of origin did not receive any payment. 
Biopiracy allegedly contributes to inequality between developing countries rich in biodiversity, and developed countries served by pharmaceutical industry exploiting those resources.
Bioprospecting is a more positive term more commonly used by supporters of commercialization of traditional medicines. While there is still no hard definition, media and academia use this less pejorative term when speaking about endeavors to capitalize on indigenous knowledge of natural resources. However, bioprospecting may also describe the search for previously unknown compounds in organisms that have never been used in traditional medicine
2. Copyrights –
 These are for artistic and literacy works. It protects songs, lyrics, books, movies etc. E.g. – Krazy4 music was said to be copied from Sony Ericson advertisement music creator without his prior consent so he sued the directors of Krazy4 for infringing the copyright Act, although later the case was settled outside the court, as the directors agreed to pay 1cr rupees as settlement amount. 
3. Trademarks – 
 These are for marks which when applied on goods shows about the origin of goods and it also assures the buyer of the good that the goods bearing this mark are of same quality. E.g. – The Xerox invented the photocopy machine and it is using Xerox as the brand name to market its product. Now people generally conceive photocopy machine whenever they hear about Xerox machine. Now no other company can use the brand name Xerox although people conceive it synonymous to photocopier. Same is the case with the fevicol a brand introduced by the Pidilite. The brand fevicol became so famous that people started conceiving fevicol as a product but still no other company can use the brand name fevicol or Xerox for their product.  
4. Industrial Designs –
 It is for all new designs which a company develops for cost reduction or for increasing productivity or quality So in short all the steps taken to gain competitive advantage. E.g. – If Toyota develops its own unique assembly line or Bajaj makes its own DTSi technique then in this case if any other company copies their technique then in this case it will be infringing the Industrial Design act.
5. Geographical Designs –
 It tells about the origin of goods and also assures that goods bearing the geographical name will have some peculiar characteristics related to that particular area. For example- Darjeeling tea, it has special aroma in its leaves. No other company based in UK or USA can keep the name of their tea as Darjeeling tea. Scotch whisky is another such example company which is not manufacturing whisky in Scotland cannot use the word scotch because they will not have the peculiarity which a scotch whisky should have.