With the announcement that FDI is soon to be allowed in all the major cities of India, the retail market is seeing a steep boom. Taking in the fact that the retail market in India accounts for 35% of the GDP (as compared to just 20% in the US) and that the market sees almost 47% growth every year, the inevitable dominance of the retail market becomes a sharper reality every day.
We hear continuous stories of the enormous potential of this market in the news, in the papers, in strategic market discussions and even in US President Obama’s speeches. The facts and figures are readily available to everyone who is interested. But the question of the hour isn’t about the potential or the figures. The question being asked by manufacturers, suppliers, export managers and trading agents is on how to successfully enter this viable market. How can they get their products in? What are the risks and benefits? What are the Do’s and Dont’s?
There is a lot of literature out there focused on this subject. But I’m going to list out a few ‘golden rules’ that are practical and often overlooked. In the blur of strategizing and planning, one often forgets to see the realities of the market they are about to enter. And in India, it is all about these realities if you are looking for a slice of your retail heaven.
Realistic Expectations: Yes, it is a country of 1.2 billion people. No, they aren’t all going to buy your products. The middle and the upper middle-class population is currently estimated at 80 million people and is expected to grow to 500 million people by 2025 according to McKinsey. But the reality is that this whole segment isn’t going to be a part of your clientele from day one. The crucial step you need to take is to enter right away. Get in and allow yourself to be molded into the Indian market, grow gradually but steadily in market share, but most of all, keep this target group and their economic expansion in focus.
Dress your Product: The higher price factor; your product is an imported one and with the high import duties and high margins in the re-sellers/retail network, the consumer price of your brand will set it apart from local brands and you will not be competing with local ‘favorites’. The higher quality perspective; People are often under the impression that imported products are akin to quality, uniqueness, status and durability. But you need to dress your product and bring out the unique selling points in order to pull in the buyers who have the income and are willing to invest in your brand. Eye-catching packaging, homeland quality marks and unique product features; these are your tools at hand that will help you sell your products at high prices.
A Shift in Attitude: Every exporter who has brought products into the Indian market will have a ready story of unexpected problems that suddenly sprouted in between the whole process. The big mistake that is often made here is doing things ‘the way they always do’. The Indian market cannot be classified as any known norm. You might have had experience with a multitude of countries and even other Asian countries, but you need to have an individual approach for India, if you want to make your mark in this market. It isn’t an act that is impossible, but it is an act that requires you to step out of your comfort zone and learn the tricks of the trade the Indian way. Indianize your strategy and make sure that it fits the market and the people you will deal with.
The Right Partner: Business in India requires careful scrutiny when it comes to choosing your local business partner. Don’t go for the braggart who promises you the sky from day one. Choose a person you share trust and compatibility with. One you can discuss long term strategies and business goals with. A person who understands the local market and the rules that govern it. This person should have the ability to start things in a small, controlled and focused pace and work towards making it big. This is what your products need.
The Right Space: Choosing where to place your product is another big responsibility that needs careful study. Keeping in mind that 95% of the retail in India is unorganized, you need to ensure that your products aren’t swallowed up by the obscure market of little tuck shops. Place them in organized retail spaces where pricing, promotions and sales data evaluation can be studied and controlled. With organized retail growing at almost 50% per year, the growth plan for your range of products is also big. Once you have more control over organized retail sector you can always tap into the unorganized sector, but then on your own terms and conditions.
The Right Promotion: The final golden rule would be to make sure that you promote your products. With an array of existing and new products to compete against, hypermarkets selling hundreds of established and many new-coming brands in outlets that cover over 10,000 sq.ft of selling area, you need to ensure that your products stand out and demand the buyer’s attention. Use traditional marketing like in-store promotions, sampling, POS and more, but also tap into the effective social media platforms, magazines, associations and trade fairs related to your segment to promote your products. This will help you gain a strong hold of your market and expand your brand’s reach.
If you do this right, India can become one of your main export countries in the near future!
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