India
The Indian retail market is exploding. According to a report published by Deloitte in January, this part of the country’s economy grew by over 10% between 2010 and 2012 and could be as big as $850bn by 2015. This is good news for convenience stores: food and grocery makes up 60% of the retail landscape.
Despite this, there are still many barriers to profit, according to Newtrade’s managing director Nick Shanagher: “Prices in India are controlled by the government through maximum retail prices stamped on every product,” he explains.
“Alcohol is controlled by the state governments and is not often sold in c-stores. Tobacco is more likely to be sold by vendors. The margins on packaged goods average around 10% and retailers rely on sales of rice and other bulk products to make a profit.”
The entrepreneurial spirit this forces retailers to develop means that even a 150sq ft family-run business can still be home to a range of over 3,000 products. And Deloitte’s report concluded that “Flexible credit options and convenient shopping locations will help traditional retail to continue its dominance in [the] retail sector”. And what is this “traditional” retail format?
“Due to real estate space constraint in prime locations within cities, traditional trade will continue to be a convenience store next door.”
Key products
New formats are bringing greater numbers of consumers into the reach of major brands. “Many Indians could not afford to shop at western style c-stores,” says Mr Shanagher.
Yet the demand for familiar names and the cache of the ‘right brand’ remains strong, and companies are reacting to this. “Clever packaging solutions such as sachets mean that big brands like Gillette are available at a price to suit every consumer.”
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