Monday, 22 October 2012

India Bursts Open Its Gates to Foreign Retailers

India has opened its doors to allow 100% foreign ownership of single brand retail stores. It’s a big move for Asia’s third largest economy with one billion inhabitants and a retail market forecast to double to $850 billion by 2020. 

This move will allow global retailers to operate without an Indian partner. Rajan Bharti Mittal, vice-chairman and managing director of Bharti Enterprises one of the countries largest retailers says that “increased investments by foreign single brand retailers will not only help improve consumer choices but also enhance competitiveness of Indian enterprises through access to global designers, technologies and management policies.”

The move will also benefit India’s small producers as any global retailers will be required to source at least 30 % of their products from small and cottage industries. However opponents fear the move would undermine small traders and farmers and destroy jobs and businesses.

Although this move does appear to be a step in the right direction, there are quite a few restrictions which could trip up a few retailers.

  • States can choose whether to participate in this or not, only about 1/3rd have chosen to go ahead with it.
  •    Retail outlets can only be opened in cities that have a population of 1 million or more. Only 53 cities meet this criteria accounting for only 12% of the Indian population.
  •  Foreign investors should invest a minimum of US$100 million into the venture and 50% should be invested in back end infrastructure.

No wonder the Indian government has insisted on investment into back end infrastructure; the country currently loses roughly 40% of its fresh produce because of infrastructure issues like lack of refrigerated trucks and temperature controlled warehouses. Inter state border transit delays and doggie power grids don’t help either.

In order for overseas retailers to be successful they should take a look at China and what has happened to their neighbours in the past few decades. Tesco, an American owned supermarket chain, and Carrefour, a French supermarket chain, have both had very different outcomes.

Tesco entered the market about seven years ago and is only just breaking even. Carrefour, who entered the Chinese market in 1995-2000, had officially overtaken local Chinese retailers in sales of “fast moving consumer goods” by 2005. Carrefour currently has over 163 Carrefours throughout China.

The reason why Carrefours have been more successful than Tesco is because they adapted more to the Chinese tastes and shopping preferences. They introduced larger aisles and “wet markets” where live animals are sold within the supermarkets.

I think that overall this will be a risky, but a beneficial move for foreign investors if they get it right. Hopefully it will create millions of jobs ( not only in retail but in the IT and Property sectors), help check inflation and modernise the agriculture and transport sector. Watch this space!

Tuesday, 2 October 2012

Perfecting the Art of 'Flagship'

Successful retail is not just about the product that you sell. It’s about the way you sell it.

As the world of innovation continues to expand, the online space is snowballing with new developments, products, platforms and operating systems that all call for something customized. Smart retailers are still realizing the potential of brick and mortar stores – and not only that, they’re embracing it as part of their omni-channel strategy.

Originally a term heralded by the lead ship in a fleet of vessels, flagship has become synonymous with retail.

While the phrase is usually limited to the largest retail store in a chain, providing the largest range of product, it’s also about the offering. Whether they offer the biggest selection, or the smallest, but most prestigious line within the brand, it works either way.

The Flagship store gives retailers the opportunity to promote the absolute epitome of their retail offering.  Oozing with brand personality and showcasing the best in their shopping experience with the finest array of stock, world class merchandising, additional services and a sleek design.
It’s an impressive contest worldwide to be the best of the best.

Size Matters
Whether the store footprint is a 50 square metres, or 500 square metres; optimizing the space is essential. 
High ceilings, oversized chandeliers, empty spaces, oversized merchandising, spacious layout, shiny, bright and eyecatching.
Or dinky and quirky, promoting the smallest, most high end range with a minimalistic approach to the design (albeit, very strategic, original and creative).

Nike flagship store in Chicago

New Zealand’s well known female fashion brand Glassons has created led a spring theme throughout their Newmarket flagship store.
Burberry store in Regent Store
Sleek Design
The competition in the technology sector continues to heat up. Apple and Samsung are going head to head to compete for the smart phone market and this is leading to stores that are trying to outplay, or perhaps match, the competition. 

This impressive design is from the Apple Store in the Netherlands.

The Pop-up Store
Creating excitement around temporary retail sites is an ever increasing trend. Not only is it an attractive idea for those looking to hold off on signing long term leases, but it also gives the opportunity to create hype around new products, or trial a new service idea.
As social media continues to grow in strength as an advertising tool – word of mouth can grow exponentially, often enhanced by guerilla style marketing.
Pop-up stores can range in length of time – from a couple of weeks to a year.

The Swiss Luxury watch maker, Hublot, ran a pop up store during the Singapore Grand Prix - for a total of 10 days.

Ksubi pop-up store

H&M ‘Beach’ pop up store

After the devastating earthquakes in Christchurch, New Zealand retail took pop-up to a whole new level with the creation of the temporary ‘Container Mall.’ This concept utalises shipping containers where retailers have created their individual pop-up style stores.

It used to be about the size of the store and the quantity of products available. Now we look for the whole package; it’s all about the experience. From service and product range through to integration, technology, design and WOW factor. Global brand are spending up large to perfect the art of flagship.