While asked to shade some light on the retail industry scenario, an avid photographer and traveler, Puneet Chawla, co-founder and CEO of Jaypore.com. reflacted:
What is the Industry scenario from your point of view?
Talking about the Indian e-commerce sector, the scenario is quite positive with a steady growth trajectory – according to the 2017 Morgan Stanley report the industry is estimated to grow at 30% year on year, with a projected GMV of USD 188 billion by 2025. Owing to rising smartphone penetration, 4G networks and growing consumer wealth across Tier I, II & III cities are some of the driving factors for this propelling growth. A big part of this is due to the rise of the upper middle class consumers in Tier II & III markets who have limited access to offline brands but equal if not higher aspirations as compared to Tier I consumers.
The Indian e-commerce sector today is in a position to sustain itself as a viable business opportunity not just for established brands (national & international), but also for start ups across segments. This is evident from the launch of varied websites & apps for services/goods ranging from banking & real estate to fashion, home decor, FMCG, electronics and even online grocers and home meal providers.
Specifically w.r.t. the lifestyle e-commerce sector in the country, there is a hyper dynamic market scenario populated by the international e-commerce bigwigs like Amazon alongside homegrown players like Flipkart, Jabong, Myntra etc. Then there are the offline brands who are venturing online with brands like H&M and Zara launching their India specific websites recently alongside a very high concentration of Indian design brands/designers online presence through their own websites and through lifestyle online marketplaces. Talking of the niche lifestyle e-commerce, where Jaypore technically rests in at the moment, there is a relatively lesser degree of market penetration with a handful of players being able to build a sustainable online model. In comparison we have been able to sustainably grow our online entity since our start in 2012 and today have a market penetration across all of India and 60 countries internationally.
How you think Indian market will be in the next five years?
Like mentioned above, we are witnessing a strong growth trajectory in the e-commerce industry in India, and the same is true for the lifestyle e-commerce and lifestyle retail industries. Talking of the lifestyle market demand, the total consumer spending of India today is USD 1349.4 billion of which 16.8% is on home decor, clothing & accessories at USD 226.7 billion (Goldman Sachs Global Investment Research, 2016; Boston Consulting Group, 2016). According to IBEF (Indian Brand Equity Foundation) 2017 report, it can be estimated that in 2020 Indian domestic retail market will cross USD 1.3 trillion, growing 60% year on year. Contributing to this growth are factors like the meteoric rise of it’s online retail industry (as illustrated above), India replacing China as the most promising markets for retail expansion, supported by expanding economy, coupled with booming consumption rates, urbanizing population and growing middle class.
There are of course challenges that will rise owing to this as well, mainly in terms of a hyper competitive market scenario with increasing influx of international brands hand in hand with rising FDI ( totaling to USD 35.94 billion in 2017 and projected to grow at 8.8% year on year as per a DIPP report). Locally as well, the number of players in each segment of lifestyle retail and e-commerce are increasing at a meteoric speed and there are a growing number of me too brands/companies in the market. To be able to build a value proposition that is distinctive in such a scenario is becoming increasingly difficult and it can only expected to be even more challenging in the years to come. Then there are many cases of startups being founded and folded in a short span of time, given complex market dynamics, lack of sustained funding and/or increasing pressure to turn profitable without a sustained growth model. One of the biggest challenges is market agility that can match up to the highly discerning consumers of today. To be able to match up to the forever on the go, digitally & intellectually empowered consumers who are more confident than ever in exactly what they want and what they like to consume, is a challenge that many market players are not able to keep pace with. And this is only going to compound in the years to come.
The key for surviving, growing and succeeding in such a scenario will be to be able to keep pace with the ever changing market locally and internationally along with the changing consumer demographic while being able to build a strong brand equity distinct from other players in the market.
Will the trends change or continue the same?
Of course they will change! Ours is a world today of ever changing dynamics all around us – from our personal lives to corporate identities. From the way we consume today to the way popular culture impacts our lives or the way we engage with socio-economic realities, there is a dramatic shift from the way things were a decade or so back, and we can only expect things to change at the same staggering pace in the times to come. And this holds true for financial entities as well.
Talking specifically of industry trends, we are already witnessing a drastic shift in the way social media marketing is shaping up today with bigwigs like Facebook and Snapchat being under the scanner and losing their original equity. So much so that there is an anti social trend slowly gaining momentum which can be expected to rise further in times to come. This calls for a smart social media strategy which many brands have come to realise – that one formula doesn’t fit all channels and that they have to carefully choose platforms that provide best value for their business, even foregoing ones that don’t necessarily drive value for their brand even if traditionally they are viewed as the biggest business generators. Then there is the increasing trend of online retailers going offline, and this is a trend will gain further momentum with times to come, even surpassing the traditional offline to online business transitions. Along with this we can expect a rise in intelligent omni channel retail formats with tech innovations that will create a seamless shopping experience for customers. Then there is the shift from utility and aspiration driven consumerism to a more emotional and intellectual satisfaction driven consumption much as per Maslow’s Hierarchy of Needs pyramid. Business wise, this can be seen through subtle shifts towards sustainable retail models, experiential branding strategies, content driven marketing and an overall focus on building emotional connections with consumers to break from the market clutter. This will only continue to rise as customers become more and more conscious of what and how they consume.
And all of the above are already diametrically different from the way things were from 5-6 years ago, so we can safely assume that the market will continue to change and adapt in tandem with the ecosystem around. Same being true for the micro trends.
What is the global impact of Indian industry?
As mentioned above, India is fast emerging as one of the most lucrative markets for brands worldwide for further expansion in light of saturation in western and other south east Asian markets. The Indian retail industry is at the cusp of fast paced growth (as was evident with figures shared earlier) and the market as whole has been ranked number one in A.T. Kearney’s 2017 Global Retail Development Index.
From this perspective, there’s no denying that India has grown to be a salient market for international brands and is no longer an afterthought w.r.t expansion preference, localized branding focus and country specific plans. From retailers like Ikea and Walmart entering or planning to enter the country to more and more brands looking at direct entry in the market and not the traditional joint venture route, the confidence in the market has grown manifold from a few years ago, leading to the market value of India increasing exponentially.
Having said that and while the market attractiveness has increased for the outside world for India, the same is not necessarily the case the other way around. Most homegrown brands and companies still remain highly localised without a strong international presence. There are exceptions of course, like ArcelorMittal, wold’s largest steel producer, Tata Motors that owns brands like Jaguar internationally. Infosys that is the fifth largest employer of H-1B visa professionals in United States, state run ONGC (Oil & Gas Corporation) that has a presence across 16 countries internationally and Old Monk, one of the few spirit brands with wide scale market penetration outside India, to name a few. But while there is comparable international clout for companies in sectors like technology, heavy metals. FMCG & automobiles, the same can’t be said for lifestyle retail and e-commerce sectors. There are a few independent designers that do have independent stores outside of the country and/or are regulars at important trade events internationally but this is still at a very nascent stage. When it comes to e-commerce there are still lesser players that have an international presence and impact.
There is immense scope for Indian companies to grow globally and going by the recent trends, it is definitely on the cards for the years to come.
About The Author:
Puneet Chawla is the co-founder and CEO of Jaypore.com. He has worked in the Indian Internet industry for the last nine years in roles ranging from Software Developer to CEO. He started his career with Info Edge the brand behind naukri.com, jeevansathi.com and 99acres.com and went on to work with startups like redBus and Exclusively.in before founding Jaypore along with Shilpa Sharma and Aarti Jesrani in 2012.