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India Shining : A Growth Opportunity Historical Asia

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India Shining : A Growth Opportunity Historical Asia Perspective According to ADB report In 1820, 60% of world GDP was in Asia. After industrial revolution, Asia lost ... – PowerPoint PPT presentation

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Title: India Shining : A Growth Opportunity Historical Asia


1
India Shining A Growth Opportunity

2
Historical Asia Perspective
  • According to ADB report
  • In 1820, 60 of world GDP was in Asia.
  • After industrial revolution, Asia lost to Europe
    and reduced to 20 of world GDP in 1940.
  • In 2006, it reached 40 of World GDP and expected
    to be original 60 of World GDP by 2025.
  • Asia is booming and major contributors are Japan,
    China and India.

3
India An Overview
4
Macro Factors Population
  • Population 1000 Million 50 Million Rich and
    300 Million Middle class

5
Macro Factors - Composition
  • 65 of population below 35 years
  • 54 below age 25 years
  • Working population in India is growing unlike
    most other developed countries
  • Emerging Large Consuming Class
  • China has issues of median age 30-34 years at the
    early stage of development and psychology issues
    after implementation of one child policy

6
Macro Trends Population
  • From joint family system to Nuclear Family
    growing
  • Housing Boom due to nuclear family, low
    interest rates, tax benefits from government and
    lastly strong Indian values driven by savings and
    owning home
  • Resulting into high growth of home textile
    category

7
Consumption of Lifestyle Products
  • Customer Segments
  • Super Haves(SEC A),
  • Haves (Upper Middle Income Group- SEC a1/a2),
  • Strivers and
  • Strugglers

8
Super Haves
  • 2.1 of urban youth and adults in 2000
  • lead global oriented westernized lifestyle
  • contribute to the bulk of purchase of
    international and super premium brands
  • highly conscious of status and image, they
    patronize brands which add to their self esteem
  • high spender and less price conscious

9
Haves
  • 9 of urban youth and adults in 2000
  • financially secure upper middle income group
  • upwardly mobile and seek more recognition
  • brand conscious and key customer to Indian
    lifestyle brands, however looks for VFM
  • Seeks contemporary brands within their price
    bands

10
Haves Household will multiply
  • The All Have segment will multiply 4 times to
    touch 23 million by 2012
  • this is the fastest growing segment
  • a very attractive for premium lifestyle brands

11
Macro Factors - Size
  • Retail industry is expected to be USD 225 billion
    and growing at 5.
  • Economy - 4h largest economy in the world on PPP
    basis -One of the fastest growing economy with
    6.5 average growth in GDP for last 10 years

12
Macro Factors - Size
  • Textile/Apparel USD 35 Billion out of which
  • Exports - USD 13 Billion
  • Domestic Apparel Market - USD 18.5
  • Home Textile - USD 1.4 Billion
  • Domestic Bed and Bath - USD .5 Billion

13
Change Drivers
  • Exposure on electronic media integration of
    global trends, yet distinct Indianism - by 2007,
    it is expected to have 67 Million household
    connected by cable and satellite.
  • International Travel - 4 Million traveled abroad
    in 2003
  • Increase in credit friendliness 50k crore in
    2000 to 160k crore in 2004 - 18 Mn credit cards
    and likely to touch 75 Mn by 2010

14
Where do these consumers buy? - Retail network
15
Retailers - Population
  • Fragmented retailing with 5 million retailers and
    96 less than 500 sq ft nation of shop-keepers
    -brilliant trading and entrepreneur community
  • Lowest per capita retail space 2 v/s 16 in USA

16
Key Retail Insights
  • India is 1/7th size but 5 times the population of
    USA. A retail format that is successful in US or
    elsewhere might not work in India. India is more
    similar to China in terms of structure of market.
  • The cost of space in India can go up due to
    population pressure. Signs of high rental and
    property prices visible.

17
Commercial Structure
  • Low cost of entrepreneurship
  • Low gross margin for branded product business as
    well as retail business e.g. Gucci, BHS v/s
    Indian brands or retailers, though real estate
    and operation cost are relatively higher

18
Political Structure
  • Unity in diversity Culture, convictions,
    values, customs, language, lifestyle, climate etc
  • Sound democratic tradition with now aggressive
    judiciary and media
  • Model of growth brilliant entrepreneurship,
    superior corporate governance, globally
    competitive service industry, rising consumption
    and not just export-led

19
However,
  • Low cost retail is very critical for long term
    profitability and survival. Indian retail square
    ft must deliver higher sales/price than many
    other countries.

20
Retail Revolution in India
21
Market Evolution Cycle
  • 1994-2000 Brand Boom
  • 2000-04 Retail Boom
  • 2004- Mall boom
  • However, home textile industry largely missed
    product upgrade cycle (unlike many other home
    product categories like furniture, ceramics etc)
    from 1994 to 2004 and now addressing all stages
    of evolution cycle together

22
In the year 2007
  • For one set of customers time poverty setting in
    like many developed countries whereas for other
    classes, shopping remains the best week-end
    outing destination.
  • Shopping Malls driving retail boom by 2007, 356
    shopping malls with 90 million square feet is
    expected to be operational

23
International Players
  • Despite FDI in retail not allowed,
  • Metro already established Cash and Carry
    Operation
  • Shop-rite and Marks and Spencer started
    direct to customer through franchise route
  • Wal-Mart with Bharti and Carrefour with Land-mark
    Group are set to enter franchising route
  • This is apart from single brand retail by large
    number of companies across sectors.

24
Domestic Players
  • Reliance Mega-retail plans
  • Hyper-markets Ambitious expansion plans by Big
    Bazaar, Star India Bazaar, Spencer etc
  • Same with Department stores category Shoppers
    Stop, Pantaloons, Lifestyle, Pyramid and so on.
  • Rural Malls ITC, Hariyali Mall Sriram Group,
    Godrej

25
Finally, Home Retailers
  • Home Stop by Shoppers Stop Home Center by
    Lifestyle 2 Ambitious expansion plans
  • _at_home (Nilkamal Group) from 0 to 7 in last one
    year and 30 in next 3 years
  • Home Improvement Category - Housefull
    (Renaissance Group) 4 to 50 in 3 years, Home
    Town by Pantaloon 6 within one year and
    Hind-ware (Somany Group) likely to start with
    mega plans
  • In addition, traditional specialty home textile
    retailers are growing very well.

26
Ambitious Retail plans are changing the retail
land-scape in favor of Organized retail.
27
Composition of Retail
28
It translates into
  • Organized retail growing at 30 p.a. compound
    growth. is expected to reach Rs. 270000/- crore
    ( USD 60 Billion )by 2011. The share of organized
    retail is expected to reach between 14 to 16 of
    total retail in 2011 from 3.2 in 2006.

29
Organized retail is changing rules of the game
  • Traditional marketing methods do not apply
    anymore. Pressure to all consumer product
    marketing companies.
  • Earlier business was driven by size (though size
    as business strategy may even work now), scale,
    street smartness, networking and contacts. Now,
    businesses are driven by strategic business
    vision and values.

30
New Growth vehicles
  • New Product Capabilities and organized retail
    format have been developing market for many new
    product categories.
  • Expected growth of retail formats - Hyper,
    Category Killer and Consolidators in wholesale
    segment

31
Consumers in India
32
Traits of India Customer
  • Argumentative Indian like to speak, argue,
    demand value reflect in buying behavior
  • Core Traditional values and changing modern
    values with distinct Indianism

33
Indian customer is traditional.
  • RTS (ready to stitch) to RTW (ready to wear)
    though tailor-made garments are still popular
    37 of total sales.
  • In one of the most posh area in India, lady
    customers get cotton filling pillow made with
    cheap shell fabric in retail shop at very low
    cost.
  • Indian customers is used to experience products.
    E.g. open and check bed-sheet set. Or while
    buying audio set, take a cd from home and play to
    listen to the real effect while buying the set.

34
Indian customers are changing
  • Design and quality acquiring significance as
    market moves towards growth phase especially in
    Home textile.
  • Consumer is willing to buy expensive products in
    right environment e.g. dust-bin for 10k, marriage
    gift bedding set for 50k, Rs. 3/- lac bed-room
    set at Home Center and lamp at Rs. 22 lac -
    niche products etc

35
Value for Money
  • Indianized solution required Anything will not
    work Shanghai to Spain Value not by European
    bench-mark or by an exporters bench-mark. Value
    is not just cheap. They are willing to pay the
    price if they see value. E.g. Soya quilt
  • Pragmatic in consumption Many premium category
    customers fill their ward-robe during twice a
    year end-season sales though they can afford to
    buy at full price.

36
Pricing
  • For premium products, one set of customer willing
    to buy, second set of customer will buy after
    they get used to premium price and last set will
    never buy.
  • Penetrative pricing to get entry into retail as
    well as to get customer look at brand. From
    McDonald to Pizza Hut have Indian menu and Indian
    entry prices. Case of Pillow marketer. Most
    brands have introduces volume drives though brand
    imagery is always premium.

37
HT products
  • Product category in the order of emotional
    attachment in buying process - Apparel, Living
    Room and then bed/bath products.
  • Living room brands complement each other and need
    not be same for bed and bath.

38
Overview Of The Attitude Towards HT
Low involvement
High involvement
Personal clothes For self hence require ultimate
attention Very high involvement and
indulgence Mostly planned. At times impulse
purchase too Frequency of purchase is high -
almost once a month
Towels Completely personal No show value
attached Frequency of purchase twice in a
year Nothing special about it Matter of
fact Very need based
Curtains For interiors Reflection of class
prestige Considered to be very important part of
the upholstery Frequency of purchase once in two
years High involvement
Bed sheets For others - others would
see Reflection of certain class
prestige Important for the overall upkeep of the
house Personal involvement in choosing the right
kind of bed sheet Frequency of purchase almost
quarterly
39
Trends For bed linen category
  • A lady considers bed-sheet sets is the most
    inexpensive tool to change look of the room.
    Willing to spend more. A see change in last 3
    years when bed-linen was bought like commodity.
  • Co-ordinated solution of complete bed-room is
    required.
  • Growth in sales of air-conditioners (400 at
    Viveks in last summer) and change in lifestyle
    Sales of quilt and blanket

40
Business Opportunity
  • Top 5 retailers commanding 4 market share
    compared to 30 in USA, UK and Germany
  • No brand commanding 5 share in any category in
    Home Textile market
  • After saturation of apparel market, HT has grown
    world over. Indication of same trend visible in
    India

41
However
  • A consumer wants all fashion, experience,
    convenience, services, good quality and good
    brand ALL AT A REASONABLE PRICE.

42
Thank You
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