India—an important market for both global and domestic retailers
The PricewaterhouseCoopers thought leadership study entitled Building to Win: How multinationals are structuring to compete in emerging markets indicates that growth prospects remain favourable in Asia, buoyed by the strong showing of China and India in recent years. India, as compared to other countries, has been relatively insulated from the global economic slowdown. This is apparent when looking at India’s consumer confidence levels, its GDP projections for the new fiscal year, investor confidence in response to election results, etc. India’s retail sector is perhaps one of the most challenging, dynamic and exciting markets to operate in, as based on our discussions with retailers—
Serving a heterogeneous market (CUSTOMERS)— India’s 28 states have unique languages, cuisine, geography, etc. and many retailers believe that consumers’ tastes and preferences vary by state, city, catchment area and even street! Brand loyalty is an important aspect in serving customers. Some interviewed retailers indicated that Indian consumers are brand loyal; that said, if retailers do not listen to consumers and use their feedback, buyers are quick to frequent other retail establishments. Consumers are increasingly demanding value for money, are not willing to compromise on product choice or quality and are willing to visit other retailers if their needs are not met
Developing a long-term investment horizon (INVESTMENT)— Both domestic and global retailers view India as a long-term investment proposition, and suggest that patience, deep pockets and customisation of products and services are required for success.
Focusing on innovation, customisation and new product development (PRODUCTS)— Global retailers who have long-term plans for India are, through the launch of India-inspired/customised products, positioning themselves as international retailers who understand the nuances of serving Indian customers in terms of offering the right product, at the right price and through the right distribution channel.
Operating within the current regulatory framework (BUSINESS ENVIRONMENT)— Currently, the Indian retail sector is not fully liberalised. Global retailers looking to enter India can do so through the cash and carry route, single brand retail (i.e., a joint venture agreement with an Indian party where the foreign retailer holds a maximum of 51 percent equity), franchising, distribution and strategic licensing agreements. Global retailers wanting to enter India need to find a structuring solution that meets their overall needs and strategic goals. Selecting “the right” Indian partners for single-brand entry, licensing, franchising and distribution is a critical success factor.