Fit To De­liver The Goods!

VMRD - - Contents - Suren­der Gnanao­livu

The In­dian Re­tail Mar­ket is grow­ing at a CAGR of 12% In­dia with or­ga­nized re­tail surg­ing ahead at a CAGR of 32% (PwC re­port “Build­ing re­tail busi­nesses for to­mor­row to­day”). This growth is ow­ing to the com­bined in­crease in the mar­ket of both the on­line and off­line chan­nels. This growth in the off­line space has im­pacted the in­crease in the de­mand of fit-out el­e­ments. The de­mand is not just for more quan­tity but also for qual­ity to keep the new-age con­sumer in­spired, en­gaged and loyal. With more in­ter­na­tional brands com­ing in, the bar has been raised and the In­dian fit-out in­dus­try has in­deed stepped up to ‘de­liver the goods’!

VM&RD had looked at the main fit-out cat­e­gories (com­prised of Man­nequins, Light­ing, Graph­ics & Sig­nages, Fix­tures and VM Props) with fo­cussed spe­cial edi­tions in the past six months with in­sigh­ful chats with over 100 top Re­tail Ser­vice Providers (RSP) who man­u­fac­ture and sup­ply fit-out equip­ment in In­dia. We now take an over­all look at the over­all Fit-out In­dus­try to get a snap­shot of trends and per­for­mance based on com­pi­la­tion of data and in­for­ma­tion from the last fi­nan­cial year of 2016-17.

Some of in­ter­est­ing high­lights of the com­pi­la­tion and anal­y­sis is as fol­low:

1. The av­er­age age of the fit-out in­dus­try is about 15 years with the old­est be­ing Man­nequins at 18 years and the youngest be­ing VM Props at 11 years. The rest seem to have been born al­most to­gether av­er­ag­ing at 14 years.

2. The over­all spend by the or­ga­nized sec­tor of the top 100 RSPs is about 1550 Cr Rs with an av­er­age CAGR of about 24%. The high­est av­er­age turnover is that of the Light­ing cat­e­gory at 337 Mil­lion Rs (33.7 Cr Rs) fol­lowed by Fix­tures at 186 Mil­lion (18.6 Cr Rs).

3. A ma­jor por­tion of the 3600 clients that are ser­viced are from the tra­di­tional re­tail seg­ment. They con­tribute in num­ber of projects to about 50-80% but the av­er­age billing from each is less than one fourth of that of clients from the Or­ga­nized re­tail seg­ment. The high­est num­ber of clients is that of the Man­nequin In­dus­try at over 1250 in to­tal fol­lowed by VM Props at about 900 ow­ing to the de­mand of these cat­e­gories from the Tra­di­tional Re­tail Seg­ment.

4. The over­all op­er­at­ing space oc­cu­pied for Fit-Out man­u­fac­ture is about 3.2 Mil­lion square feet with the high­est av­er­age op­er­at­ing space oc­cu­pied be­ing that of the Fix­ture cat­e­gory at 63,700 square feet

fol­lowed by Light­ing at 34,500 square feet. In­ter­est­ingly, the Man­nequin cat­e­gory re­quires the least area de­spite man­ag­ing the high­est num­ber of clients.

5. The over­all man­ning of the top 100 RSPs in the fit-out in­dus­try is over 9000 skilled staff with the high­est av­er­age em­ployed by the Light­ing cat­e­gory at 138 fol­lowed by the Fix­tures cat­e­gory at 120. Again, the Man­nequins cat­e­gory is the low­est at 33.

6. Fi­nally, in terms of rev­enue pro­duc­tiv­ity on op­er­at­ing space, the high­est is the Light­ing cat­e­gory which is close to Rs 10,000 per square foot fol­lowed by the Graphic & Sig­nage cat­e­gory at close to 9000 per square feet. Light­ing leads again in peo­ple pro­duc­tiv­ity at a high of about 2.43 Mil­lion Rs (24.3 Lacs Rs) per per­son em­ployed! This is fol­lowed by the Fix­ture cat­e­gory at 1.55 Mil­lion Rs (15.5 Lacs Rs).

7. Over­all data shows that Light­ing leads in turnover, growth and pro­duc­tiv­ity.

It is not sur­pris­ing that it mo­nop­o­lizes the sup­ply for In­dian and in­ter­na­tional re­tail­ers op­er­at­ing in In­dia which in­di­cated that it has achieved global stan­dards ear­lier than the other cat­e­gories. The Fix­ture cat­e­gory flows closely with a close to monopoly of sup­ply in In­dia with Chi­nese sup­pli­ers still be­ing se­ri­ous com­pe­ti­tion in terms of qual­ity. The other cat­e­gories too are seen to be im­prov­ing steadily.

Over­all, from the RSP’s per­spec­tive, it’s been a good CAGR of rev­enues, more op­por­tu­ni­ties, grow­ing rev­enues, in­creas­ing ef­fi­cien­cies of op­er­a­tions (in terms space and peo­ple). From the cus­tomers’ per­spec­tives,the take-aways have been the avail­abil­ity of glob­ally com­pa­ra­ble qual­i­ties, bet­ter price and choice. So, we can con­fi­dently con­clude that the In­dian fitout In­dus­try is poised for an en­cour­ag­ing win-win po­si­tion for both the Buyer and the Seller.

In-store Asia 2018 fea­tures all the top RSPs in the fit-out cat­e­gories fea­tur­ing many new ideas that will sub­stan­ti­ate the find­ings. Look for­ward to see­ing you there at the largest re­tail trade fair in the In­dian sub­con­ti­nent that fo­cusses on re­tail fit-out and in-store mar­ket­ing.

• Suren­der has an ex­pe­ri­ence of over two decades in the In­dian re­tail in­dus­try in Re­tail Strat­egy, Store De­sign, Plan­ning & De­vel­op­ment, Re­tail Mar­ket­ing, Vis­ual Mer­chan­dis­ing, Roll-out man­age­ment, Re­tail Au­dits, Train­ing, Teach­ing and Writ­ing. His ca­reer en­com­passes hold­ing of se­nior po­si­tions as Ex­ec­u­tive Vice Pres­i­dent & Head Mar­ket­ing, Brand Ex­pe­ri­ence, Store De­sign, Plan­ning & De­vel­op­ment at lead­ing re­tail­ers like Shop­pers Stop, Re­liance Re­tail and Mahin­dra Re­tail and also as a se­nior re­tail con­sul­tant work­ing with lead­ing re­tail­ers and brands in In­dia. He is cur­rently a Sr Re­tail Ex­pe­ri­ence Con­sul­tant.

Source: VM&RD fit-out Re­tail Ser­vice Providers Sur­vey 2017

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