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India is riding a retail boom fuelled by a fast-rising middle class and young consumers (photo: EPN)
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Perhaps no other market outside the Chinese mainland has the potential of India’s consumer market. With a population of 1.1 billion, including a quickly expanding middle class and many young consumers, India is riding a retail boom that’s expected to grow to US$453 billion this year from an estimated US$333 billion in 2007.
India’s middle class is tipped to grow fourfold from five per cent in 2005 to 20 per cent by 2015, so there’s massive scope for development. Retail is currently dominated by the food sector, with 59 percent of the market, leaving huge potential for other lifestyle sectors.
At a seminar last week on exploring this massive market, Indian business representatives said Hong Kong companies are well suited to meet untapped consumer demand in their country.
Quality Products
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CK Nair of Shoppers
Stop shares tips on
doing business in India
at an HKTDC seminar
on exploring the
Indian market
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“India is beckoning like never before,” said Rajesh Bhagat, Mumbai Consultant for the Hong Kong Trade Development Council (HKTDC). India, he said, is currently the world’s fifth-largest destination for retail investment, and is ranked by AT Kearney as the most attractive retail market.
According to leading department store group Shoppers Stop, home retail is one promising sector. Shoppers Stop Business Head CK Nair said the company’s home-retail department has grown by an average of 23 per cent in each of the past three years.
He said Shoppers Stop sources 85 per cent of its products, including 55 per cent of its kitchenware, from Hong Kong and the Chinese mainland. “Hong Kong products are known for their quality,” Mr Nair said. “We know that we can trust and depend on the quality of products we get from them.”
But because home retail is still in its infancy in India, Mr Nair said, the challenge is to attract consumers with innovative products.
Proactive Suppliers
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A Shoppers Stop retail outlet
in Amritsar |
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Like Shoppers Stop, other major Indian retailers source internationally and are familiar with the brands and products that Hong Kong and mainland companies offer. But Hong Kong companies can take advantage of the sector’s rapid expansion by actively approaching Indian retailers, said HKTDC Assistant Chief Economist Dickson Ho. He recommended that supplying products and introducing brands can be done through licensing and franchising.
Companies considering entering the Indian market may want to seek local partners through Indian chambers and associations, which have a better understanding of local culture, consumer trends and Indian laws and regulations.
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Making it in Mumbai
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Hong Kong companies that want to explore the Indian consumer market can join the inaugural Lifestyle Expo in Mumbai in October. Organised by the Hong Kong Trade Development Council, the three-day event will showcase Hong Kong lifestyle products, including consumer electronics, electrical appliances, household and lighting products, fashion accessories and healthcare products. Organised with the Department of Foreign Trade and Economic Cooperation of Guangdong Province, the trade fair will be open to the public on the last day.
The expo will also include product showcases and product parades to display exhibitors’ quality products to buyers. Exhibitors will also benefit from networking events and a business-matching service to be offered at the grounds, as well as business seminars to update and educate suppliers on how to do business in India. The HKTDC will also organise a side trip to New Delhi following the Expo to help exhibitors explore potential business opportunities outside Mumbai. For details of the expo, please visit www.lifestyleexpomumbai.com/.
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Among the country’s promising product sectors is the consumer electronics market, valued at US$45 billion in 2009-10. It’s projected to reach US$60 billion by 2012, according to the HKTDC’s Mr Bhagat. The vast majority of electronic goods – 97 per cent – are imported.
The lighting, toy, optical and stationery industries also show potential. Besides targeting first-tier cities such as Mumbai, Delhi, Bangalore, Chennai and Kolkata, experts say companies should also consider the rural market. “There’s enormous potential in these smaller communities,” Mr Bhagat said. “But you have to be more innovative to sell there.”
Opportunities in India’s huge consumer market are slowly countering the traditional perception of doing business in the country. “India in the past was seen as a difficult market to enter, mainly because of red tape,” Mr Bhagat said. “India now is rolling out the red carpet to outside business.”
