British retailer Marks and Spencer Group Plc (M&S), which operates in India through a joint venture with MukeshAmbani-promoted Reliance Retail Ltd, is developing an alternative model for expansion in India. The company has opened five pilot standalone beauty and lingerie stores in India and plans to open one more in March.

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International Retailers Savour India’s Retail
Dream
British retailer Marks and Spencer Group Plc (M&S), which
operates in India through a joint venture with MukeshAmbani-
promoted Reliance Retail Ltd, is developing an alternative model
for expansion in India. The company has opened five pilot
standalone beauty and lingerie stores in India and plans to open
one more in March.
#DigitalErra Thought Corner

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India’s retail market is expected to grow to $1.1 trillion by 2020
on the back of income growth, urbanization and attitudinal shifts.
The organized retail sector which is estimated to reach
approx.18-20% of the total sector, by 2020, is growing at a rate
of 20%-25% p.a.
M&S have five standalone beauty and lingerie stores and it is a
special format which they are trying out only in India.
“India will continue to be a big and one of the most important
markets for us. India has the highest number of stores outside
the UK. With India growing at close to 7%, a population of 1-1.2
billion, a sizeable chunk of consumers under the age of 35 years
and the disposable income continuously growing, we expect to
grow at a similar pace. India is one of the top five sourcing hubs
for us globally. 30% of M&S clothing products sold in India is
sourced from India. Plus, India is the only country where we have
airport stores,”Venu Nair, MD, Marks & Spencer Reliance India
said.

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The sentiment in India’s retail market remains optimistic
witnessing growth not only in the major metropolitan cities, but
also spanning across numerous tier 2 and tier 3 locations,
providing enhanced business opportunities for retailers.
Global Retail Brands Foraying India
Retailers, especially from US and Europe, have been showing
increasing interest in the India market, due to the growing
opportunities in this sector. This is highlighted by the fact that
more than 40 major international brands have entered the
country in the last two years.
Around a decade ago, government relaxed norms restricting
foreign investment into retail. Sensing the opportunity, European
biggies such as Marks and Spencer And Benetton, which already
had stores in India through franchise and licensing agreements,
were joined by Mango, Next and Debenhams as well as big
Spanish fashion group Inditex, the owner of the Zara and
Massimo Dutti brands.

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H&M, Gap and Adidas followed them after further reforms in 2012
that allowed international retailers to trade under their own
names provided they sourced 30 per cent of their materials
locally.
Seeing Rise In Sales
Inditex Trent Retail India, the joint venture between Zara’s owner
and the retail arm of the Indian conglomerate Tata, recorded a
rise in sales of 16.9 per cent to $125m for the year to March 31st
2016. H&M reported sales of $68m in the year to the end of
November, only a year after its launch in the country. Also, things
changed for M&S after it partnered with Reliance Retail, a unit of
the Indian conglomerate Reliance Industries, and developed a
domestic supply chain. Last year (FY16), their sales were up by
17% and this year (FY17), the sales grew by 21% in the first half.
“Through our local sourcing of around 60 per cent of which is
from south Asia, we are competitively priced in India,” says Venu
Nair, managing director for Marks and Spencer Reliance India.

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Conclusion
Foreign retailers are embarking on ambitious expansion plans in
India, where regulatory reform, the rise of e-commerce and
shifting attitudes towards female clothing are finally widening
access to a challenging market.India remains a highly competitive
market for pricing. Understanding the consumer psyche would be
the key to succeed for global retailers in India.