Exelixi Management Company is a young retail focused venture that helps international brands develop and establish themselves in India. They have already rolled out almost 14,000 square feet of retail space for toys and games industry on behalf of Simba and claim to be one of the largest retail players in this fledgling industry. Exelixi has ready access to at least five other international brands that have committed to enter the Indian market via them. In conversation with Retailer magazine, Amit Chaudhary, Co-Founder Exelixi talks about the genesis of his organisation.
Saniya Seth (SS): Tell us more about Exelixi Management Company. What is the core role as a partner for international brands?
Amit Chaudhary (AC): Exelixi Management Company is a young retail focused venture that helps international brands develop and establish themselves in India. The idea behind Exelixi is to be preferred gateway of choice for International consumer brands looking to enter and build a substantial presence in India in a short time.
SS: What factors do you take into account before bringing in an international brand?
AC: Before identifying a brand, we like to identify the sub-sector that we think is attractive from a latent demand perspective. Once we understand the market or prospective consumer then we try and identify brands that could potentially fill the gap. Brand recognition, standing in the global market and quality only products then help us create a short list. Lastly, we believe in the India consumer story and we like to work with brands that believe in the same.
SS: How easy or difficult is it for an international brand to be visible in India today?
AC: Visibility is a function of reach and awareness. Reach can be built through a store network or other distribution channels. The brand needs to spend on the right activities to create awareness. Both go hand-in-hand and one helps the other. It is tough for international brands to gain visibility today because one of these two things is missing. Some brands end up not building any reach because of poor local partners and some brands want visibility without committing to spend on building awareness.
SS: What should be the ideal format of the store while entering the country?
AC: Retailers can opt for a store format that provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behaviour. There is no standard format.
SS: What is your take on the India growth story? Will FDI be a boon for the country in the long run?
AC: The retail industry currently is experiencing the impact of a contrived slowdown on account of the impact of poor government policies. However, consumption is here to stay and will keep retail growing at a frantic pace. In three year it is expected that the retail potential, driven by some steps by the current dispensation, and economy favouring result at the next elections will reach levels roughly double of where they are today.
Foreign direct investment (FDI) in India's largely unorganised retail sector will help curb inflationary pressure by easing supply side constraints and revive economic growth.
SS: What sectors require foreign entrants currently?
AC: A large majority of sectors in the consumer space remain untapped today. Other than fashion apparel, electronics, jewellery and sports apparel all other sectors are under tapped and offer an attractive opportunity for foreign brands.
SS: What other brands is Exelixi going to bring into the country this year?
AC: Over the past few months, a number of brands have shown interest in entering India with us. We are in advanced stages of discussion with a few. We can't name these brands as yet, but they range from a kids apparel player, a travel accessories company and a very interesting sports franchise retailer.
SS: Why have you opted for these brands in particular?
AC: Like I mentioned earlier, we like to identify the sector first and understand the market before we identify a brand. These brands have to then be able to fill the gap that we feel exists in the market. We feel, the brands that we are in conversation with offer us the best opportunity to do so.
SS: Why is Indian market viable for international brands? What changes need to be made before entering here?
AC: India is the consumer market of the future. Our per capita consumption on a number of categories is very low even when compared to other developing countries. Increasing disposable income, exposure, and a voracious appetite for brands are going to fuel this for the coming few years. Forward looking brands will recognise this for the opportunity it is and will try and establish a name and presence here before the market takes off. This will create great barriers to entry in a market that is going to be extremely lucrative in the future. With regards to changes that the brand needs to make, the brands need to recognise that this is an opportunity with a gestation period of 5-10 years. And it is an opportunity which, like any other market in the world, won't fructify without making investments in building the brand locally.
SS: What is the biggest challenge international companies face in India today?
AC: Access to right representatives for their India business has to be the biggest challenge. A lot of international companies find that the options to enter India are limited. They either end up in forming partnerships that are doomed to fail from the start or end up hiring local talent that has no long term commitment to the business.
SS: What is the viability of Indian brands abroad?
AC: Signaling an increase in global participation and competence, India is profoundly becoming a source of foreign investment for rest of the world. As per the ongoing trend, wherein emerging market economies (EMEs) are under transition, a number of private players, along with state-owned entities, are increasingly expanding their footprints in foreign lands through direct investments with a view to achieve regional and global reach.
Indian economy's integration with the rest of the world has given domestic corporate sector access to global networks and markets, transfer of technologies and skills and has also facilitated research and development (R&D) for value addition. India Inc's foreign investments have primarily been driven by either resource seeking or market seeking or technology seeking motives. Talking about the recent times, Indian companies are increasingly investing overseas for resource acquisitions, especially to buy energy resources in Australia, Indonesia and Africa.