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Brands find fast fashion is stuck in the slow lane in India

Consumer sentiment in India is down on account of high inflation, the consequent high interest rates, and the slowdown in the economy. The Indian economy is expected to grow by less than 5% in the year to 31 March, a decade‘s low. Priyanka Parashar/Mint

Mumbai: Fashion brands entering India came in with the knowledge that Indian customers were far more cost-conscious than their Western counterparts. Now, they are discovering that they are not particularly fashion conscious. Many are happy to shop for the latest fashion at end-of-season sales, and then sport the same for the next two or even three seasons, irrespective of what‘s in fashion, said Govind Shirkhande, managing director and customer care executive at departmental store chain Shoppers Stop Ltd. That‘s the reason sales are becoming popular, said retailers speaking at the Retail Leadership Summit in Mumbai. Some of this behaviour may be driven by the state of the market. Consumer sentiment in India is down on account of high inflation, the consequent high interest rates, and the slowdown in the

economy. The Indian economy is expected to grow by less than 5% in the year to 31 March, a decade‘s low. As a result, people don‘t mind waiting for promotions and discounts, saidVinay Nadkarni, chief executive and managing director at fashion chainGlobus Stores Pvt. Ltd. As a result the distinction between ―in-season‖ trends and ―upper-season‖ trends has blurred as consumers buy in January and July sales and typically wear those clothes over the next season as well. ―There is no expiry date on what they wear,‖ said Nadkarni. Interestingly, though, one retailer claimed that sales worked only when the current season‘s products were on offer, which would mean that customers are fine with wearing what they buy in this season‘s sale over the next few, but will not buy this season‘s products at next season‘s sale. ―The younger consumer is price conscious,‖ said Arun Chander Mohan, co-founder and managing director at Jabong.com, an online retailer that has been in the news after it raised more than $100 million in funding from its existing investor Rocket Internet and new investors including CDC Group
Plc, the UK‘s development finance institution last month.

―But (the younger consumer) will not settle for two season-old clothing at a discounted price,‖ he added. The apparel market is expected to touch $225 billion by 2020, a fourfold increase in the space of a decade, according to a 2012 report by Boston Consulting Group. In the past year, global brands such as Sweden‘s Hennes and Mauritz AB(H&M) and US retailer Forever 21, have announced an entry into India, lured by success of Spanish fashion label Zara. H&M received approval from the Foreign Investment Promotion Board (FIPB) for an investment of Rs.720 crore in November. H&M stores are likely to open by July next year. Forever 21, which has six stores in the country, has committed an investment of $50 million for expanding its presence in the country. Zara, owned by Inditex Trent Retail India Pvt. Ltd, a joint venture between Spain‘s Index
S.A and Trent Ltd (part of the Tata group), posted a revenue of Rs.404.80 crore in 2012-13,

according to Trent‘s annual report for the year. In some ways, Zara is an outlier and, for most retailers, it is seasonal sales and promotions that are driving business. In the December quarter, revenue and profit at Shoppers Stop Ltd, saw little change from a year ago (the company returned a profit of Rs.17.34 crore, up from Rs.17.09 crore).

‖ said Rachna Nath. she added. The trend is unlikely to change anytime soon. Even online retailers see a large part of their revenue coming from discounts and promotions.‖ said Akshay Mehrotra.And a promotional event hosted by Future Value Retail Ltd. chief marketing officer at Future Value Retail. executive director at audit and consulting firm PricewaterhouseCoopers. Myntra’s expansion plans get boost from large investments Jabong has received more than $100 mn from existing and new investors while Myntra raised more than $50 mn in a funding round  . Jabong. with people willing to wait if it means a lower price. over the Republic Day weekend (24-26 January) saw people queue up across its large format departmental stores to avail steep discounts. ―With online retailers pushing sales aggressively every few months offline retailers too are getting more active on the sales and promotions front. Shoppers Stop‘s Govind Shrikhande talks about why being omnipresent is important for retailers. which runs chains such as Big Bazaar and Food Bazaar. This has led to a change in consumer attitude. ―Consumers are looking at getting maximum value out of every rupee that they spend.

com raised more than $50 million in a funding round led by Premji Invest. India‘s largest online retailer Flipkart had raised some $360 million as it continued to pursue its strategy of aggressively chasing market share.Myntra. Flipkart has been fast expanding its fashion offering in the past one year. Jabong. a Myntra spokesperson said by phone. Last year. Myntra. the investment arm of Azim Premji‘s Wipro.5 million into Jabong as part of the retailer‘s latest funding round. the UK‘s development finance institution. . Jabong‘s managing director Praveen Sinhasaid in an interview over phone. the investment arm of Azim Premji‘s Wipro Ltd. CDC had announced on its website on 30 January that it invested $27.com has received more than $100 million from its existing investorRocket Internet and new investors including CDC Group Plc. Photo: Hemant Mishra/Mint Bangalore: Online fashion retailers Myntra and Jabong have raised large sums of money to keep fuelling their aggressive expansion and compete better with the likes of Flipkart and Amazon.com raised more than $50 million in a funding round led by Premji Invest.

Manu Jainand Mukesh Bafna. according to a CLSA report published late last year. Sinha said the company is not immediately looking to find replacements. switch to cheaper variants consumer products . Has India’s consumption story gone bust? A slump in growth and rampant retail inflation are forcing middle-class India to cut back on spending. Amazon now sells books. He declined to be named. electronics.1 billion and is expected to grow to $22 billion in five years.The world‘s largest retailer Amazon launched its platform in India last July and has been quickly ramping up its offering. ―We will use the funds to invest in technology and build up our supply chain. apparel and accessories in the country. Myntra and Jabong will use the money to improve their technology and build their logistics network. Jabong‘s fund raising was reported by The Economic Times on Wednesday. is also in discussions to raise money. a person familiar with the matter said. Two of Jabong‘s four co-founders and co-managing directors. Jabong and Myntra are among the few Indian online retailers that have access to large funds.‖ Jabong‘s Sinha said. excluding online travel. Another big firm. Along with Flipkart. Snapdeal. quit the company in the past month. India‘s e-commerce market. is valued at $3.

42. The Reserve Bank of India (RBI) expects inflation. the slender twig is a popular teeth cleanser in rural India and chewing it is supposed to help fight plaque and gum disease. Called a datun. Photo: Pradeep Gaur/Mint Mumbai: For the past five months. Laxmi Shankar Verma has given up using Colgate toothpaste and has switched to chewing a twig of the Neem tree instead. ―everyone uses this‖. In his village in Uttar Pradesh state.8.‖ said Verma. or using a product less often.The pace of growth in sales of consumer goods has been slowing since December 2012. wife and four children. in north India.1. The trend has accelerated as India‘s worst economic downturn in a decade deepens and inflation stays at heightened levels. The trend is called downtrading—whether it‘s Verma cutting out a cost item from his budget altogether by switching to the Neem twig he can break off a roadside tree. who earns Rs. or middle-class households moving to cheaper brands and smaller pack sizes. But the reputed health benefits of the Neem twig have nothing to do with his decision to stop using toothpaste.000 a month. measured by the . but it was only in the quarter ended September 2013 that sales by volume actually contracted. including the money he makes by doing odd jobs. who works as a security guard at a residential building in the suburbs of Mumbai. added Verma. out of which he keeps up to Rs.000 for his expenses and sends the rest to his family of six—mother. ―Mehngai bad gayi hain (Prices have increased).

value growth is mainly a function of price increases or inflation. ―We must urgently accept the India consumption story has some big problems on the fundamentals that we must try and change or accept and factor into our expectations and our business strategies. slumped to 5%. India Ratings and Research Pvt. said the report authored by Sameer Shukla. but all of it was driven by price increases. but it was only in the quarter ended September 2013 that sales by volume actually contracted. according to a December report by market research firm Nielsen and Co.. and in the fiscal to 31 March 2013. In terms of value. growing in an environment that has all the natural ingredients needed for it to flourish and yield an everincreasing crop year after year nearly as if on ‗auto pilot‘ and almost forever.5% and 8. it is like the demographic dividend—it has lots of potential.5% in the third quarter of 2013 from a year ago.‖ market research consultant Rama Bijapurkar wrote in the 17-23 January edition of MintAsia. Growth began to moderate with the financial crisis that struck the world in 2008.6%.‖ the report said.87% in December. economic growth averaged 4. but miles to go before it gets fulfilled. Consumer prices rose 9. said in a report released on 3 December. sales improved by 6%. Ltd. India‘s private final consumption expenditure (PFCE) grew at its slowest rate in 37 quarters in the three months ended 30 September. ―Low growth in private consumption is becoming a well entrenched trend.‖ Facts back her up.‖ she wrote.‖ . the slowest pace in 10 years. The sales of packaged consumer goods shrank 0. ―Consumer India is not anywhere near what we believe it to be—a healthy.2% year-on-year from 1. Growth by volume represents the component of sales growth on account of selling more units of a product. said Nielsen. Some analysts are already asking whether the consumption story that paced the Indian economy‘s average 9% growth in 2003-07 is as good as over. ―These are the two lowest growth rates in the last 37 quarters.5% a year later. The pace of growth in the sales of consumer goods has been slowing since December 2012.6% in the previous quarter. the fastest pace in a basket of 17 Asia-Pacific economies tracked by Bloomberg. young fruit tree. adding that PFCE for the quarter grew at only 2. and range between 7. ―On the contrary. to top 9% in the three months to 31 March. In April-September. when volume growth was around 10%. Compare this with 2012.Consumer Price Index (CPI). director of Nielsen‘s India unit. the local arm of Fitch Ratings Inc. and is forecast by RBI to slump below 5% in the full year to next 31 March.

In the prevailing economic climate. mobile phone voice and data plans acquiring priority over products such as body lotions and and skin creams.PFCE is the money spent on goods or services that are used for individual and household needs or wants. and this is a reflection of that. So it was a matter of time for it to percolate to the FMCG sector. the maker of Saffola cooking oil and Parachute hair oil. priorities have changed. a retail consulting firm. ―We have to reconcile to the fact that the overall GDP (gross domestic product) growth has fallen approximately to 4. retailers said. with education. Ltd. chairman and managing director. Technopak Advisors Pvt. it‘s not surprising that sales of consumer packaged goods have slumped. partly because of the high inflation and partly because of the GDP slowdown. behind Indonesia and the Philippines. explainedArvind Singhal.‖ said Harsh Mariwala. pushing India to the third spot.5%. Even until 2012. confidence in India plunged six points. In the September quarter of 2013. . India had the highest consumer confidence levels among countries included in Nielsen‘s quarterly Consumer Confidence Index. While the consumer has the same amount of money to spend. chairman and managing director of Marico Ltd. The slump in economic growth and the consequent job losses and cutbacks in corporate hiring have shaken consumer confidence. Changing consumer priorities A stagnant PFCE means retailers and manufacturers are fighting for a share of the consumer‘s wallet that hasn‘t increased in size.

and FMCG domestic revenues will . ―India has entered into a slow growth. including food and toiletries. which refer to often-purchased goods such as home and personal care products. domestic FMCG revenues have grown at 1. an industry lobby. Car sales fell 5% to 1.GDP is the value of a country‘s output of goods and services. The third quarter of fiscal 2014 will see the first trend reversal.2 million between April and November. ―Over the past 12 quarters. high cost. Consumer packaged goods firms have come to accept that the new reality means they will now grow below the nominal GDP growth rate. There are various reasons for that and nothing is going to change in the next four-five years. In December 2013. according to the Society of Indian Automobile Manufacturers (Siam). high inflation economy. FMCG is short for fast moving consumer goods. Mint reported that slowing economic growth and the high cost of finance and fuel had made car ownership more expensive. unlike in the past when they exceeded the pace.2x the nominal GDP growth.‖ said Singhal of Technopak Advisors. impacting buyer sentiment.

S. aimed to cut 20% of its stock keeping units (SKU) by end-2013 and another 10-20% in 2014. the Financial Times reported on 5 December.‖ he said.‖ said R. HUL‘s volume growth in the December quarter slowed to 4% from 5% in the preceding three months.1. Unilever‘s portfolio has about 50. From our perspective. On an average. Sridhar said.grow at 0. at least in the short-term. Sales rose 9. of ICICI Securities Ltdwrote in a 3 January report. the Anglo-Dutch parent of Hindustan Unilever Ltd (HUL). According to Sridhar. Companies are now going slow on the number of launches in India and even consolidating their product portfolios. The firm has also changed its focus from expanding further into the interiors to improve sales from its existing network of stores.V. A distributor in Mumbai for the maker of Wheel and Rin detergents and Lifebuoy and Lux soaps said the firm had withdrawn new launches like Fair and Lovely night cream andSunsilk Natural shampoo from the market in the past year. In an interview to Mint newspaper in November. at a press conference in Mumbai on 27 January.040 crore.‖ analysts Anand Mour and Sreekanth P.000 SKUs. the market growth for the next few quarters will remain slow and it might be two or it might be three. ―The growth in 2012 was in double digits and in 2013 it is in single digits. Unilever Plc. HUL has dropped some promotional offers and increased prices. The rural story Likewise with rural penetration. ―They are more conscious of their frequency of usage.060 crore in the quarter ended 31 December. firms increased their rural reach by 50-150% in the past three years. Sridhar. says Vikash Agarwalla.9x nominal GDP growth. Sunil Duggal. the consumers are being far more conscious about their family budgets and tightening discretionary spending—money used to purchase non-essential items. To manage costs. chief executive officer at Dabur India Ltd. citing Pier Luigi Sigismondi. the firm‘s chief supply chain officer. principal at consulting firm Booz and Co. led by price increases.5% to Rs. Family budgets shrink For instance. chief financial officer of HUL. admitted that the mood among consumer goods makers was defensive and Dabur was being conservative in expanding its portfolio. Clearly there is a very significant slowdown in volume and value.7. India‘s biggest packaged consumer goods maker earned a net profit ofRs. an increase of 22% from a year ago. .

who heads Nestlé‘s Asia business. Ltd namedD. shampoos. In the past few years. Top-management changes were also effected at HUL. consumer firms had focused on immediate market gains at the expense of execution quality even as overall consumption was slowing. growth across rural markets between January and September slowed to 4% from 7% in the year-ago period.000 villages. Shivakumar. Nestlé‘s sales in India had been growing at about 20% a year in the three years to 2011. In a slowing economy. South-East Asia. who left the company in June. companies are rethinking their strategies. replacing Anand Kripalu. Nandu Nandkishore. Marico has nearly doubled its reach in the last five years to 30. chief executive at Emami Ltd. Nestle India and L’Oreal India Pvt. senior vice-president. and not increasing the number of outlets under our coverage. Dabur India. Ltd. the maker of Maybelline andGarnier. said Chander Mohan Sethi.For instance. Reckitt Benckiser Plc. Shivakumar as the new chairman and chief executive officer (CEO) for the India region. conceded that the maker of Kit Kat chocolate and Maggi noodles had made a mistake by focusing on the mass market and ignoring the emerging affluent segment.‖ he said. Anand joined Mondelez International Inc. according to Agarwalla of Booz. who led the business for eight years. The last three months of 2013 saw a handful of consumer companies effect top-level management changes. detergents and packaged staples. in July as president for India and South Asia and managing director of Cadbury India. putting in place executives better equipped with navigating the slowdown. In an interview to Financial Times on 14 January. a former senior executive at Finnish handset maker Nokia Oyj. but this growth decelerated sharply—to 8%—in the third quarter of 2013. But with the rural consumer joining her urban counterpart in cutting back on spending. the maker of Oreo biscuits andCadbury chocolates. the report said. the room for non-performance is limited as the stakes are high.‖ said Krishna Mohan. which tracks sales in 30 core consumer categories such as soaps.. the maker of Zandu balm and Fair and Handsomeskin cream.000 towns. ―Making a top-level change may be expensive but companies are not shying away from bringing in the best talent as good people will pay for themselves. ―We have slowed down on geographical expansions. has more than doubled its reach in the last 18 months to cover 30. the maker of Vatika shampoo and Real juice. Urban growth (across categories) declined from 8% to 2% in the same period. . succeeded Manu Anand. On 9 December. beverage maker PepsiCo India Holdings Pvt. According to data by research firm IMRB International.

‖ said Ullas Kamath. ―They are changing pack sizes to the smaller size. Small enterprises are chasing aggressive growth plans with an eye on the future. said Singhal. Ramakrishnan. Similarly. the maker of Ujala fabric whitener has raised Rs.350 crore of sales. joint managing director. Kamath expects to close the financial year with close to Rs. a supplier to companies like Unilever. liquids and cakes.650 crore to pay off debt that it had acquired during the acquisition of the Indian unit of Henkel in May 2011 and build a corpus of Rs.Remapping strategies Faced with declining sales. Long-term picture In the past two months. The strategy may boomerang.‖ he said. . Nestle also saw a change in leadership with Etienne Benetreplacing Antonio Helio Waszyk at the helm in India. The Times of Indiareported on 4 January. In a bid to maintain prices in spite of the high inflation. Nandkishore told the Financial Times. LABSA is short for linear alkyl benzene sulphonic acid. higher input costs and rising domestic competition. Galaxy Surfactants Ltd. manufacturers of consumer packaged goods have started substituting expensive raw materials with cheaper alternatives. This is cheating to the consumer. in an interview in December.250 crore to fuel its growth. ―In my opinion.‖ said G. slowing economic growth.1. ―We want to be a Rs.000 crore company by 2020. Henkel AG and Reckitt Benckiser. Jyothy Laboratories Ltd. a depreciating local currency. The price point is maintained by reducing quantity or then lowering the quality. what the consumer companies are doing is something fundamentally dangerous. Nestle is redrawing its strategy to cater to more affluent Indians whose household budgets are more immune to the country‘s rising inflation and faltering economy. we have looked at substituting LABSA with vegetable oil-based surfactants in making soaps and detergents. On 1 October.10. The firm thinks it‘s maintaining the price point. which is used in the formulations of all types of synthetic detergent powders. director (home and personal care business). manufacturers of tomato ketchup like Nestle and HUL have also reduced the quantity of tomato paste in the ketchup.‖ He pointed to the trend of smaller regional firms gaining a foothold by catering to consumers who are comfortable with trying new products because they have felt cheated by the larger brands. ―With the dollar-rupee volatility and prices of crude increasing in the past few months.

Thus. even when economic growth accelerates and market conditions stabilize. said in November at a corporate event in Mumbai. For instance. which. they may not revert to consuming it immediately even if the economic growth reverses to becoming better. in mid-July. In November.‖ said Rachna Nath. multinationals remain invested in India and have announced ambitious investment plans.220 crore. chief executive officer of personal care business unit at ITC Ltd. General election to decide the course of FDI in retail Retailers. causing a shift in the consumption pattern. would be rolled out to other South-East Asian economies.5% to 67. experts say the next five years are critical for the growth of the retail industry in India . it may be a while before consumers gain enough confidence to spend like they used to in the boom years or start trading up to more expensive products and lifestyles. from that perspective. Still. ―As consumers cut back on spends. trade brands or pack sizes for a smaller or cheaper brand or discontinue to buy a particular brand. leader of the retail and consumer practice at PricewaterhouseCoopers Pvt. PepsiCo India pledged Rs.‖ Sandeep Kaul.3% by spending nearly Rs. ―A couple of companies are carrying out their pilot projects in Indian markets. if successful. there is enough mind share investment.000 crore of investments in the country by 2020.‖ The downturn has inured people to focusing more on necessities and less on aspirational purchases.Also with an eye on the long-term growth story. ―They will stick to the lower priced brand for longer.29. said Kaul. Unilever increased its stake in its Indian subsidiary from 52.33. Ltd.

Photo: Pradeep Gaur/Mint Mumbai: The next five years will be critical for the growth of the retail industry in India because the result of this year‘s general election will decide whether or not global supermarket chains enter Asia‘s third largest economy. B. it will help many modern retailers who have been waiting to enter India. Retailers and experts spoke on the first day of the Retail Leadership Summit 2014 in Mumbai on Wednesday. according to a clutch of retail industry experts. reversing previous policy. .S. they will work for non-FDI retailers. ―If FDI (foreign direct investment.‖ Two state governments—the BJP government in Rajasthan and the Aam Aadmi Party regime in Delhi—have recently announced decisions not to allow FDI in supermarkets. Nagesh. said irrespective of which political party or grouping comes into power.‖ he told the two-day meet. the retail industry will continue to grow—albeit at the local retailer or modern trade level. ―If the Congress comes to power. in retail) does not happen under the Bharatiya Janata Party (BJP). chairman of industry lobby Retailer‘s Association of India. as many states under the new government would allow for foreign investments in retail.

did not end with the two forging an alliance.‖ Some experts seemed sceptical about the importance of FDI in multi-brand retail. said Biyani. Nagesh said. major supermarket chains such as the Wal-Mart Stores Inc. B. says report . of the US and French retailer Carrefour SA are yet to make up their minds about entering the multi-brand retail sector in India. more steps should be taken to support the interests of smaller traders and farmers. Even if a non-FDI supporting government were to assume power after the general election due by May. Biyani had denied any immediate association with a large foreign retailer in a recent interview. but that foreign investments will definitely speed up the process. Nagesh described the policy reversals by the two governments as disappointing.S. It is a wrong stance taken by the states as it does not present a good precedent for future governments. It is highly misconstrued in India and is a media-created hype. says report Consumers have been postponing major purchases over the past 12 months in response to the prolonged inflation. Prolonged inflation mutes consumer spending.. founder and group CEO at Future Group. On consumer goods. largely driven by the convenience associated with that retail format. whose Future Group has in the past held talks with Carrefour. Not many retailers were looking at FDI. The talks. however. Small neighbourhood stores.‖ said Kishore Biyani. Nagesh shares his thoughts on FDI in retail. Sanjiv Mehta. said modern trade will continue to penetrate smaller towns and cities with or without foreign investment.Barring British retailer Tesco Plc that is in a joint venture with the Tata Group. ―FDI in retail has no meaning any more. will continue to be relevant in India. ―One is going against a national policy. he said.. specially FDI in multi-brand retail. chief executive officer and managing director at Hindustan Unilever Ltd.

the central bank expects the economy to grow by a little less than last year‘s pace of 5%. according to the report.Urban consumers have reduced discretionary spending in several categories and are spending only on essential items.5% a year later. the slowest in a decade. titled Emerging Consumer Segments in India. the fastest pace in a basket of 17 Asia-Pacific economies tracked byBloomberg. says the report by KPMG and the Retailers Association of India. Photo: Priyanka Parashar/Mint New Delhi/Mumbai: Consumers across urban India have been postponing major purchases over the past 12 months. spending only on essential items. the report indicated. urban consumers have reduced discretionary spending in several categories and value-conscious consumers have been opting for bulk buying. . Reduced purchasing power has impacted a large segment of consumers.87% in December. The Reserve Bank of India expects inflation as measured by the Consumer Price Index to top 9% in the three months to 31 March. Because of increasing prices. to be released on Wednesday at the Retail Leadership Summit 2014 in Mumbai. in response to the prolonged inflation. Consumer prices rose 9.5% and 8. the apex body representing retailers of India. In the 12 months to March. according to a report by consulting firm KPMG and the Retailers Association of India.6% in the first half of the fiscal year. and range between 7. Growth averaged 4.

big-ticket purchases where consumers tend to wait for a longer period before deciding to buy. Car sales fell 5% to 1. The auto industry has been going through one of the most sluggish periods in over a decade. has been a difficult market for the past 12 months. Anand Ramanathan. associate director at KPMG Advisory. While at the lower end of the consumption base consumers were ―clearly down trading‖. India. it fell six points. Mint reported that slowing economic growth and the high cost of finance and fuel had made car ownership more expensive. In the September quarter of 2013. there will be more bulk purchases.2%. ―I don‘t think people were down trading.‖ he said. but for consumer goods generally. on the upper end. said Sandip Tarkas.2 million between April and November. said Ramanathan. in turn. president (customer strategy) and chief executive officer (Future Media and T24) at Future Group. Until 2012. a Fitch group firm. said Ian Woodcock. The categories which have been most affected are consumer durables and automobiles. also reflects the subdued mood. according to the Society of Indian Automobile Manufacturers. there is serious money in this country and even at the lower level people want to spend. this index in India was the highest among countries included inNielsen‘s quarterly Consumer Confidence Index. Private final consumption expenditure.One of the outcomes of the economic slowdown being stretched over such a long period is that consumers have become a lot more open to trying out new brands. an industry lobby. . said that a significant amount of brand switching is another outcome of the current economic situation. The Consumer Confidence Index. A January report by India Ratings and Research Pvt.6% in the quarter ended June 2013—the second slowest growth in the last 37 quarters. an indicator of consumer spending in the economy. from 1. he said. impacting buyer sentiment. for the quarter ended September 2013 grew to 2.‖ Woodcock added. but it has been steadily slipping since. pushing India to third spot behind Indonesia and the Philippines. ―It‘s been difficult market for everyone—not just us. Ltd. an indicator of consumer outlook towards the economy and personal spends. has given traction to smaller and regional brands. In December. This. senior vice-president for international sales at American watch retailer Timex Group. said the outlook for urban consumer sentiment is likely to remain subdued in fiscal year 2015 amid reduced affordability. but what we saw was that there were changes in footfalls in stores…and everybody was affected by that.

growing aspirations and brand awareness were helping online retailers and smaller retailers reap the benefits. Darshan Mehta. as there are fewer newer customers. Promotions. partially on account of the lower base effect. ―For most brands that have been around for over a year. driven by both retailers and brands. Growth. India Ratings expects overall median revenue growth for the retail sector to be in the range of 8-10% in fiscal year 2015.At electronics retailer Ezone.‖ said Rajan Malhotra. agreed retailers. said demand had been within expectations. affecting same-store-sales growth for the year. The retailer that offers apparel. CEO of Ezone. is largely being driven by existing consumers. a retail venture ofReliance Industries Ltd. ―Home business will be under pressure. Nearly 50% of affluent consumers worldwide buy apparel online: PwC study . said Malhotra of Ezone. The super loyal and loyal consumers who buy a brand have held on. ―You have to create demand.6% in the first half of fiscal year 2014. stimulate it. Firms with presence across smaller towns and cities have benefited. but also because of improved volumes. the median revenue grew 18. slowing demand in newer homes has impacted sales of home furnishings and electronics items. footwear and accessories saw a 12% growth in revenue from a year earlier. said the number of new people entering into a brand franchisee has slowed. chief managing director at V-Mart Retail Ltd that runs 89 value format departmental stores across tier II cities and non-metro regions. that operates 41 stores. The report added that muted consumer spending due to prevalent economic uncertainties will likely drag into fiscal year 2015. he added. anywhere upwards of 25% of business comes from new consumers buying the brand— and this has slowed down. It notes that post the economic slowdown in fiscal year 2013.‖ he said. who are upgrading to better products. especially in the second quarter of the fiscal year—due to extended discounting. KPMG‘s Ramanathan suggested that while demand in urban India had sputtered.‖ he added. president and CEO at Reliance Brands. have helped keep demand afloat. part of Future Group. Lalit Agarwal.

says report by According to various studies. which account for just 25% of the apparel bought by this set of consumers. Photo: Mint Mumbai: Nearly 50% of affluent consumers worldwide buy clothes online from online retailers as they look to get better deals and variety. said the PwC Experience Radar 2013 study titled Lessons from the Global Retail Apparel Industry. Singapore) and developing (China. a report byPricewaterhouseCoopers said on Thursday. it said.‖ said Rachna Nath.‖ .7. Affluent consumers account for the top three percentile of all apparel consumers and for them the digital channel is now an integral part of the shopping experience. online retail accounts for close to 1% of the overall retail market in India. ―Affluent consumers in India earn about Rs. Online purchase of clothes is now ahead of purchases made through traditional channels. India. The percentage of affluent Indians shopping online is 70% more than in China but less than what is seen in Malaysia. the consultancy firm said in its report. ―Digital has impacted the way business happens as no other factor has. which account for just 25% of apparel bought by affluent. retail and consumer leader at PwC India.Online purchase of clothes is ahead of those bought via traditional channels. Malaysia) countries.16 lakh on an average per annum and spend Rs.700 affluent shoppers from large cities across developed (the US. The study is based on a survey of 3.500 per month on apparel. the Netherlands. Indonesia.

in the just concluded Google Online Shopping Festival (GOSF) that took place in midDecember.‖ said Arun Chander Mohan. However. To capture this trend. which announced its December-quarter earnings on Thursday. According to various studies. Subramanian said. founder of online retailer Jabong. with nearly 40% consumers saying they are influenced by film actors. said in a 12 December note. and Salman Khan‘sBeing Human range. we are growing at 25%. they have started to capture a significant portion of overall sales‖. ―For us.com. chief executive officer. For instance.com. albeit on a smaller base. vice-president. he said. In comparison. ―Quarter on quarter.‖ Sandeep Komaravelly. India‘s largest online marketplace. Myntra‘s top 20 brands include a Hrithik Roshan collection called HRX launched exclusively online.To be sure. one of the main drivers of fashion and online purchases is Bollywood. and more people buying online.‖ said Ganesh Subramanian. said Kumar Rajagopalan. Online retailers are growing much faster than brick-and-mortar counterparts. Retailers Association of India. a lot of these new shoppers become repeat buyers and add up to the traffic on the website. Shoppers Stop Ltd. which is a collection for men against rape and discrimination. Overview of Indian economy . online retailers like Myntra offer a range of celebrity endorsed and promoted brands. In fact. For instance. saw its sales spike 10 times against last year. ―Initiatives like GOSF act as a catalyst to further boost adoption of online shopping in India. Growth is coming from people buying more. chief merchandising officer at online retailer Myntra. marketing. has seen its bill size grow 50% over the year ago. apparel sales is growing at 20% month on month. online retail spending is just a fraction of the overall retail spending in the country. Farhan Akhtar‘s Mard. snapdeal. Volume growth slipped 1% as consumer sentiment remained weak in a tough economic environment. which in December reported revenues of over $100 million. Myntra on an average gets 600. Like-to-like sales compares sales of stores that have been running for over a year with growth coming from opening new stores. Jabong‘s growth is coming from small towns and metros.000 visits a day and.5% led by price increases. ―when it comes to deals and price-led sales. saw its like-to-like sales growth for the quarter at 5. According to the PwC report. snapdeal. despite the slowdown. online retail accounts for close to 1% of the overall retail market in India.

Historic changes are unfolding. India is now home to globally recognized companies in pharmaceuticals and steel and information and space technologies. Generating growth that lifts all boats will be key. caste and gender. learning outcomes remain . health conditions have improved. However. due to population growth. Over the six and half decades since independence. the country is in the midst of a massive wave of urbanization as some 10 million people move to towns and cities each year in search of jobs and opportunity. Life expectancy has more than doubled. and women—who ―hold up half the sky‖— empowered to take their rightful place in the socioeconomic fabric of the country. In fact. How India develops its significant human potential and lays down new models for the growth of its burgeoning towns and cities will largely determine the shape of the future for the country and its people in the years to come. The historic changes unfolding have placed the country at a unique juncture. including region. while primary education has largely been universalized. It is the largest rural-urban migration of this century. India will soon have the largest and youngest workforce the world has ever seen. Disadvantaged groups will need to be brought into the mainstream to reap the benefits of economic growth. literacy rates have quadrupled. Fostering greater levels of education and skills will be critical to promote prosperity in a rapidly globalizing world. the country has brought about a landmark agricultural revolution that has transformed the nation from chronic dependence on grain imports into a global agricultural powerhouse that is now a net exporter of food. While India‘s average annual per capita income was $1. will need to be addressed. unleashing a host of new opportunities to forge a 21 st-century nation. At the same time. housing. And. one of India‘s poorest states. the absolute number of poor people in some of India‘s poorest states actually increased during the last decade. and a sizeable middle class has emerged.410 in 2011–placing it among the poorest of the world‘s middle-income countries– it was just $436 in Uttar Pradesh (which has more people than Brazil) and only $294 in Bihar. Poverty rates in India‘s poorest states are three to four times higher than those in the more advanced states.2 billion people and the world‘s fourth-largest economy. for more than 400 million of India‘s people–or one-third of the world‘s poor–still live in poverty. and infrastructure to meet soaring aspirations and make towns and cities more livable and green. many of those who have recently escaped poverty (53 million people between 2005-10 alone) are still highly vulnerable to falling back into it. Massive investments will be needed to create the jobs.With 1. and a growing voice on the international stage that is more in keeping with its enormous size and potential. Inequity in all dimensions. India‘s recent growth and development has been one of the most significant achievements of our times.

an overwhelming 40 percent (217 million) of the world‘s malnourished children are in India. the largest trade confidence survey in the world.2 trillion investment planned in the infrastructure sector will go a long way in boosting export performance of Indian companies and the Indian growth story. The growth is estimated to be even greater in FY 2014 –15 (5. The US$ 1. has positioned India at the top with 142 points. a number of India‘s states are pioneering bold new initiatives to tackle many of India‘s long standing challenges and are making great strides towards inclusive growth. and too many secondary graduates do not have the knowledge and skills to compete in today‘s changing job market. Their successes are leading the way forward for the rest of the country. and those who are face frequent disruptions. An estimated 300 million people are not connected to the national electrical grid. are comparable to those in the world‘s poorest countries. indicating what can be achieved if the poorer states were to learn from their more prosperous counterparts.7 per cent). at present. India now has that rare window of opportunity to improve the quality of life for its 1. maternal and child mortality rates remain very low and.2 billion citizens and lay the foundations for a truly prosperous future–a future that will impact the country and its people for generations to come. Government of India. Ports and airports have inadequate capacity. and trains move very slowly. .3 per cent in FY 2012–13. One in three rural people lack access to an all -weather road. and only one in five national highways is four-lane. The Indian economy is expected to grow at 3. The HSBC Trade Confidence Index. The increasing demand due to its population makes the country a good market for consumption goods. Experts express confidence that the figure will scale US$ 325 billion by the end of the current fiscal. Although India‘s health indicators have improved.low. Improving health care will be equally important. according to a survey by global consultancy firm Ernst & Young (EY).4 per cent in the current fiscal. The country‘s infrastructure needs are massive. Union Minister for Commerce and Industry. touching US$ 303 billion in FY 2012–13. Nonetheless. Less than 10 percent of the working-age population has completed a secondary education. India is the most attractive investment destination in the world. almost double of what it managed (US$ 167 billion) four years ago. Of particular concern is the nutrition of India‘s children whose well -being will determine the extent of India‘s much-awaited demographic dividend. India‘s exports have also been doing well. in some states.1 per cent) and FY 2015–16 (5. a slight increase from 3. the manufacturing sector–vital for job creation– remains small and underdeveloped. And. according to Mr Anand Sharma. as per projections from the Organisation for Economic Co-operation and Development (OECD). according to the report.

700 billion (US$ 27. Exports from India during August 2013 were valued at Rs 1.20 billion) through commercial papers (CPs) during the first half of FY 2013–14.700 in 2013.000 currently. according to the global wealth report released by the Credit Suisse Research Institute. as per an industry body. on back of increased demand from all major markets. fertilisers and electricity – which. registering a growth of 28. tax and advisory firm Grant Thornton.285. according to Mr P Chidambaram. Some of the other important developments in the country are as follows:         IT spending by the Government of India is projected to reach US$ 6. The interest for costume jewellery is on the rise and costume jewellers estimate that they have clocked 20 – 30 per cent growth in the current fiscal. said Mr Banmali Agrawala. Public cloud services market in India is expected to grow by 37. Government of India. Garments exports from India have increased by 31 per cent to touch US$ 1.5 per cent in 2013 to touch US$ 434 million. as per Mr P Chidambaram.652. according to a report by global assurance. including the US and the European Union (EU).6 billion worth of value domestically in 2012 by processing and fabricating gold bars and coins. Union Minister for Finance. a growth of 7 per cent year-on-year.9 billion during the January–October 2013 period.02 billion (US$ 26.24 billion. according to a study by Gartner. cement. India's IT-business process outsourcing (BPO) industry revenue is expected to cross US$ 225 billion by 2020.7 billion. Indian corporates raised Rs 1.53 per cent as compared to Rs 1. titled 'The SMAC Code-Embracing New Technologies for Future Business'. Union Minister for Finance.19 billion year-on-year (y-o-y) in October 2013.000 by 2018 from about 182.28 billion) to boost investor confidence.5 billion to US$ 279. natural gas. is the first major step towards this direction.56 billion) during August 2012. according to the latest data published by Department of Industrial Policy and Promotion (DIPP).000 in 2000 to US$ 4. India Inc had announced 345 transactions worth US$ 6.4 billion in 2013. Foreign exchange (Forex) reserves of India rose in the week ending October 11. In the first 10 months of 2012. at 8 per cent in September 2013. A total of 169 issuers raised this amount. President and CEO. registering an increase of 33 per cent over the corresponding period a year ago. India added about US$ 17.42 billion). Wealth per adult in India has risen by 135 per cent from US$ 2. This is an increase of US$ 119 million from the US$ 315 million forecast for 2012. The cumulative amount of FDI equity inflows into India were worth US$ 303. according to a report by research and advisory firm Gartner. The company's upcoming plant at Chakan. The industry size is expected to touch Rs 150 billion (US$ 2.The Economic Scenario India's industrial economy is gathering momentum on the back of improved output of eight core sector industries – coal. General Electric (GE) plans to make India a manufacturing hub for its global markets due to its huge talent pool and lower manufacturing costs.28 billion) to boost investor confidence. at an average annual rate of 8 per cent. The number of millionaires in India is expected to reach 300. 2013 by US$ 1. steel.830 billion (US$ 29. Some of the other important economic developments in the country are as follows:      Indian companies signed as many as 360 private equity (PE) deals totalling US$ 8. Government of India.40 billion) by December 2015. Maharashtra. crude oil. according to a report by Prime Database. The Cabinet Committee on Investments (CCI) has approved the speedy execution of 36 infrastructure projects entailing investments of Rs 1.830 billion (US$ 29. rose at its fastest pace in a year. according to a Confederation of Indian Industry (CII) report.35 billion (US$ 20. according to data released by the Reserve Bank of India (RBI). refining.06 billion in the April 2000– August 2013 period. . GE South Asia. Growth Potential Story The CCI has approved for speedy execution of 36 infrastructure projects entailing investments of Rs 1.

has estimated the sector to record a compound annual growth rate (CAGR) of 12–15 per cent over the next five years. The total number of registered micro. 2013 References: Ministry of Finance. India is readying itself to sign the free trade agreement (FTA) on services and investment with the Association of Southeast Asian Nations (ASEAN). Department of Industrial Policy and Promotion (DIPP). small and medium enterprises (MSME) in India recorded a 19 per cent growth in FY 2011–12. agricultural gross domestic product (GDP) in India is expected to grow by over 5 per cent in the current agricultural year (July 2013–June2014). The target for the two-way trade partnership is US $100 billion by 2015. Press Information Bureau (PIB).  The Life Insurance Council (LIC). the industry body of life insurers in India. according to the Ministry of MSME's annual report for FY 2012 –13. Securities and Exchange Board of India (SEBI) . Exchange Rate Used: INR 1 = 0. for which an integrated transport network is necessary. the emphasis is on a massive road connectivity plan to tie the region together to enhance economic objectives. Media Reports. Road Ahead With the objective of taking bilateral trade relations to the next level of a comprehensive economic partnership agreement. Moreover. Thus.01600 as on November 22.