The West India retail market is invariably driven by customer service. The regional brands sustain on the basis of the services they provide. And the ratio of market share between international and regional retailers is 40:60, as regional retailers have a highly dedicated clientele.
The Western region retail backdrop is dominated by the markets of Mumbai, Ahmedabad and Pune. New regional retailers are interested in high street locations which hold a good captive audience and have adequate facilities for shoppers. This is the high priority area for them.
The market across key cities is mostly driven by retailers from the fashion apparel, F&B, fashion accessories, and electronics segments who are keen to create brand presence in main streets. Along with high streets, demand for retail space has been upbeat in the region’s mall clusters, too.
Mumbai has been a preferred city, in the whole of western region, for both domestic and foreign brands keen to open their first outlets, or expand their presence across India.
The city’s favourable demographics, along with the availability of investment-grade retail space have led to strong demand from retailers for shopping space. Retailers/brands are also attracted by the increasing incomes and rising brand awareness among consumers here.
The South Mumbai micromarket has prime retail areas like Breach Candy, Pedder Road, Warden Road, Kemp’s Corner and Heera Panna Market.
Although the streets are congested, with little parking space, yet, they attract high footfalls. The rentals in these locations are in the range of INR 300-500 per sq ft per month on carpet area, depending on the location and frontage.
An Overview of the Jewellery, Apparel & FMCG Market
The last three years have seen a massive change on the jewellery front. There are a lot of trends that are going beyond state with companies going public and pan- India and several Indian companies going overseas.
So it has been an exciting time for the jewellery industry primarily driven by the fact that India is a growing economy. People’s fashion and design sense is something which is very variable and keeps changing, so it cannot be restricted to one region alone; it can be liked by anyone, anywhere, despite cast and community.
So, the boundaries between north Indians and south Indians have broken completely. If you look at a typical north Indian wedding, you can find people wearing south Indian jewellery, mix and match jewellery etc, which has brought consumers to a bigger market. Also, that is what has made various players to go to different states.
In the apparel segment, people in Gujarat are very welcoming towards new fashion and keep a track of latest trends in vogue. Vibrant coloured pants which are seen every now and then these days were accepted in Ahmedabad long ago.
The apparel market of Gujarat is very customer service oriented. Providing the same customer service in all locations acts as a major attraction to the customers, feel retailers.
A tough competition exists in the packaged products FMCG market. Due to this, profit margins have been tight in this segment. Competition in this field is necessary as it keeps the retailers on their toes and challenges them to innovate.
Segment-wise growth in West India The Jewellery Market
“These are exciting times and in these times, growth is very imperative. To survive, you have to be of a scale – either you have to be small size, niche and boutique, or you need to be of a particular scale to survive. With reference to merger and acquisition, what happened in food sector, will now happen in jewellery sector,” said Saurabh Gadgil, Managing Director, PN Gadgil Jewellers Pvt Ltd, a Maharashtra-based company.
He further added, “We equally focus on online as it is an important medium that can surely influence the decision of customers. So we have a very robust, fully-functional eCommerce site, where we sell jewellery. So it is also going to be our area of focus for the current year.”
The Apparel Market The success rate of Jade Blue, a formidable player since 1981 in men’s apparels based in Ahmedabad, catering to the market demands of formals and casuals, can be identified from the fact that despite so much competition and store opening at every corner and the advent of mall culture, it is still growing at quite an appreciable rate.
“At Rs 15,080 per sq ft, only 4 stores are owned, rest all is rented. If one has to grow in retail, one needs to open stores on annual basis, which is not possible unless stores are rented,” commented Jitendra Chauhan, CMD, Jade Blue.
Being into the men’s apparel market for long, Jade Blue owner is well aware of the verve of market, and can easily make future predictions, colour trends etc. The men’s apparel market is bifurcated in two segments – the formals & casuals.
For Chitale Bandhu, in its 65th year of operation, a family owned FMCG business established in 1950 by R B Chitale as an extension to the dairy business that was established in 1938; the growth percentage is 15 per cent annually. Its expansion plans are restricted to Pune as it is majorly into sweets and the shelf-life of sweets is vey less.
The FMCG brand has 14 retail outlets in Pune. It started from Rs 500 and now its annual turnover is Rs 250 crore plus. “Technology comes in when you increase your product range and quantity,” point out the Chitale Bandhu owners. In 1950s, the brand was manufacturing only 300kgs of bhakarwadi daily, which has now increased to 5000kgs.
This has been possible with the aid of mechanisation. Few years ago, Chitale Bandhu went online enabling people to order products online and get it delivered anywhere in the world. The brand completely relies on the franchise concept.
High streets Vs. Malls
The brand, P N Gadgil Jewellers, focuses more on high streets and except for one store located at Phoenix Mall, the rest of its four stores are located in the high streets of Pune. Its flagship store located at Laxmi Road, wherein the rentals are between 30-45 lakh per sq ft, is one of the plush areas of the city.
Same case is seen with the apparel retailer Jitendra Chauhan from Ahmedabad. He says that none of Jade Blue stores are placed in malls as he prefers high-streets more. He has a flagship store situated at CG Road Ahmedabad, which is one of the premium retail locations.
Saurabh of PNG Jewellers believes in stores within the vicinity of customers and keeping it stocked with the right kind of merchandise. An ideal location is chosen on parameters such as parking facility, safety and proximity from the city. He says to do that a proper study of market and consumers is done.
He ensures that the market requirement is fulfilled by the merchandise in the store. Factors like trust, legacy and emotional connect is what makes the brand special to consumers.
“The clientele of Jade Blue is not just limited to Gujarat, but NRIs and people from different states come down to our stores to satiate their apparel demands,” claimed Jitendra Chauhan. “Be it the big bosses in Gujarat, the Adanis or the man behind the success of Arvind Mills, all shop here,” says the apparel retailer.
Chitale Bandhu, on an average, sells about 500 cans of bhakarwadi daily. While most sweetshops in Pune are predominantly North Indian or Gujarati, it caters to Maharashtrian taste buds, which is its USP. All its recipes are homemade and first tried out by them.
Competing with global With a store in Dubai, P N Gadgil Jewellers is looking to expand in California, thus taking the tally to 25 stores in three countries including India, USA & the Middle East by the end of this year.
Chitale Bandhu is giving global FMCG products a good competition with its international presence in the UK, USA, the Middle-East, Singapore, Japan, Australia and New Zealand. For namkeens, it plans to have an overseas approach. In export market, it caters to chain shops.
Strengthening the Brand To strengthen the brand and make it a national brand, PNG Jewellers plans to enter markets of Madhya Pradesh, Goa and Karnataka in the coming financial year and add 15 more stores in year 2015 in India and overseas.
To be more diversified, the brand has started a diamond manufacturing factory near Andheri East so as to have better control over the product and this year it targets to increase the diamond vs. gold ratio to 20:80 from the present 10:90. In future, it may come up with an IPO as well.
Jade Blue, the apparel retailer, has proven itself as a master in ethnic wear with 13 stores in Gujarat plus stores in Indore, Raipur, Jaipur, Pune, thus making the total count to 20. “We have just initiated the process of expansion,” informed Jitendra Chauhan, CMD, Jade Blue. “In retail, one cannot sustain if one limits oneself to a curtailed geographical area. So, expansion is must.”
Chitale Bandhu, the FMCG brand, owns two outlets and 12 franchises in Pune. Currently, it has more than 250 dealers across Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh and Gujarat. For namkeens, it plans to have a pan-India approach.
Going forward, prime high streets and Grade A malls will go on witnessing a good, flowing demand from both domestic and international retailers planning an expansion or entry into the western region. Sales in the modern retail stores in these cities are actually quite encouraging, and will surely pave the way for organised retail setting in the near future.