The Customer Call
The Indian Retail scenario, despite sagging global economies, is looking up owing to one critical trend – the evolving new age Indian customers. This has engineered growth in different formats of branded retail across India throwing open multiple doors of opportunities. Rules of retailing have been rewritten with retailers having had to take customer centric business calls to acquire, engage and retain footfalls beyond the physical store. To participate in this trend, Retail Design and Fit-out practitioners have had to relook at their creative and operating models.………... let’s take stock!
Firstly, the macro environment, the Indian retail scene has grown steadily in the organized sector despite it having a mere share of 8% of the total retail size of around $450 Billion. With 300 million footfalls every year, it’s exponentially growing at 26% annually taking India to fourth place in being the most attractive among 30 emerging retail markets. This growth is happening mostly from expansion of the current brands and formats in India in the Branded, Ethnic and Luxury (marginally) retailing segment……. even without FDI having really kicked in! FDI, in single or multibrand, will certainly augment this growing supply. Collaterally the demand for real estate, expected to reach 56 million square feet by 2013, has grown and spread in about 280 malls and 500 high streets across tier I, II and III cities. In this, the dominance of quality shopping destinations by branded formats is sustained mainly because of increasing consumption by the new age customer. The new age Indian customer, the engine of this growth, is the mighty middle-class which has grown to a staggering 300 million - 20 times in the last 10 years!! 51% of this population is sub 25 years old, who have great propensity for branded retail built through exposure and experience. Exposure from globe-trotting, done by 10 million Indians annually, and experience in India in prominent malls and high streets. The explosion in choices in-terms of stores and offerings has made loyalty rare making innovative differentiation in brand experience a critical business strategy. To achieve this retail design and fit-out practitioner have had to understand the customer, connect and engage in the constantly transforming physical and virtual market place.
This market place is predominantly made up of Branded, Ethnic and Luxury brand retailers each addressing a large section of the same customer segment, the middle class, but for different aspirations. Let’s take a look at each……….. A significant part of the branded retail segment is International brands like Debenhams, Zara, OVA, Diesel, Calvin Klein etc. and expected to explode now that FDI has comes in, though not immediately owing to admin challenges of entering India. They have indeed led the way in creating global benchmarks in the Indian customer context. Their retailing strategies have been put together after studying the Indian customer intently. And now, the discerning customer wants nothing lesser! Indian organized retail brands from players like Future group, K Rahejas, Tatas, Reliance Retail, RPG, Aditya Birla Retail, Landmark and others too have been working hard on delivering world class experience through quality of product, service and store environment. They all have the ‘early mover’ advantage of knowing the customer from the start of organized retailing in India. But the new age customer being so different has blurred this advantage. Approach to Retail design and fit-out conceptualization is having to be reinvented to being highly customer centric, differentiated and experiential and truly world class in execution. All will agree that consistency has been an issue in the Indian context!
Ethnic Indian designer labels, growing at a stupendous 40% CAGR, have dominated boutique retailing in India. Labels like Ritu Kumar, Manav Gangwani, JJ Valaya, Anita Dongre, Gaurav Gupta, Nandita Basu, Rohit Bal and many more, have evolved to appeal to the new age Indian customer with their collections presented in unique, plush, stunning environments located in premium market places alongside branded stores. Even here the customer is demanding the same global experience as in that of branded retail. The need for customer-connect using Indian art and culture has made this the main turf for Indian retail design and fit-out practitioners. This turf will be challenged by international players who have vast experience in working across different cultures and countries. Local players have the advantage of delivering updated solutions if they keep a finger on the pulse of the customer at all times. This is an important turf protection call to take and follow through with action by keeping abreast of global trends. Though the luxury segment is growing at 20%, a significant portion of this growth has not come from luxury brands but from homes, furniture/interior design, cars, yachts, watches and travel. Luxury brands’ consumption has been mostly restricted to watches, accessories and fragrances offered by brands like Louis Vuitton, Hermes, Burberry, Chanel, Jimmy Choo, Cartier etc. The management of customer expectations in luxury brands requires disproportionate investments, for both the retailers and the design practitioners, to the returns expected in a nascent luxury brand market like India. Not surprisingly, unlike the branded and the ethnic segment, these brands don’t plan to expand their business in 2012. Currently the small demand is met almost wholly by imports for their design and fit-out needs. Don’t see local players’ sustained contribution in this as of now. Another important trend is that on-line retailing, steadily growing at an annual rate of 35%, has taken the store beyond physical limits and transformed consumption patterns. Retailers are taking customer centric calls to integrate the ‘click and brick’ models and thus opening new opportunities to define the total retail experience using retail design and fitout. There’s a huge need to align with this new and popular customer trend to be relevant to the new age Indian customer. The above clearly indicate that the India Retail Industry, driven by customer demand, is gradually inching its way towards a tipping point to becoming the next boom industry. With the onset of globalization and the rest of the western world having slowed down, the attention is on India for international players – retailers and collaterally design and fit-out practitioners too. For the practitioners, success will come by combining the science of understanding customers (retailers and the end customers) and the art of designing innovative solutions for them. All this is easier said than done! For them this needs going beyond fancy vision statements and giving serious attention, commitment and effort to investing in people, infrastructure, technology and knowledge. Studying the new age Indian customer expectations and the opportunities arising from FDI, will show that this is now a basic mandatory requirement to sustain and succeed. It’s time now (why wait for FDI?) for the Indian design and fit-out industry to act on this and transform from being ‘design centric’ to ‘customer centric’ and deliver consistent world class store experience that helps acquire, engage and retain the new age Indian customer for a lifetime
International branded retailers
Indian organized retailers